CPSS

• Origination Growth: After underperforming growth expectations in 2025, sustained strong origination growth began in March 2026. Q2 2026 originations hit $758 million, a 75% YoY increase, with quarter-over-quarter growth of over 40%. Cumulative 2026 H1 originations reached $1.3 billion, up from $884 million in H1 2025. Total warehoused loans exceed $900 million, sufficient to support continued growth.
• Sales and Dealer Network Expansion: The sales force expanded 96% YoY to 149 representatives (a 60% increase since the start of 2026), mostly consisting of inside sales reps covering national territories. 1,345 new and reactivated dealers were added in Q2 2026, bringing the total active dealer base to a company record 11,889, an 84% YoY increase. Currently, two-thirds of lending comes from franchise dealerships, and one-third from independent dealerships.
• Application Growth: Total applications in Q2 2026 hit 1.1 million, a 42% YoY increase. The company maintained its 51% approval rate, indicating no credit concessions to drive originations growth.
• Credit Performance: Credit quality has improved alongside growth. Total delinquency (over 30 days, including repossession inventory) fell to 12.16% from 13.1% YoY. Net charge-offs as a percentage of average portfolio declined to 7.28% from 7.45% YoY, and repossession volumes are trending downward. Debt-to-income and payment-to-income underwriting ratios have remained stable through the growth period.
• Recoveries: Recovery rates are seeing upward momentum as weaker 2022 and 2023 loan vintages exit the portfolio. The overall recovery rate rose to 33.3% in Q2 2026, up from 30.4% YoY, with newer vintages showing much stronger performance: 37.5% for 2024 vintages and 47.1% for 2025 vintages.
• Industry and Macro Context: The subprime auto lending market has low competitive entry, with only ~5-6 major competitors matching the company's scale, limiting new competitive pressure. The securitization market remains strong, and the company completed its largest-ever securitization recently. Core macro drivers for performance (low unemployment) remain favorable, and regulatory activity from the CFPB has been muted.

Management did not provide formal quantitative full-year or future quarter guidance, but noted that: - The strong origination growth achieved starting in March 2026 is a structural positive change, and sustained growth would deliver strong results going forward. - Management expects recovery rates will continue to trend higher through the end of 2026 as older lower-recovery vintages fully exit the portfolio. - The company remains positioned for continued growth through the remainder of 2026 if current origination momentum holds.

Consumer Portfolio Services operates as a single-segment consumer auto loan originator and servicer, so no breakdown across multiple product segments is provided. Overall consolidated financial performance for Q2 2026: total revenue of $121.4 million, an 11% increase year-over-year (YoY); pre-tax earnings of $9 million, a 29% YoY increase; net income of $6.2 million, a 30% YoY increase; diluted earnings per share of $0.27, up from $0.20 YoY. Total managed fair value loan portfolio reached $4.2 billion, an 18% YoY increase, with a net yield (after credit losses) of 11.3%. Shareholders' equity hit a record high of $319.2 million, a 5% YoY increase. Return on managed assets for Q2 2026 was 0.9%, up from 0.8% YoY.

Management explicitly noted forward-looking statements are subject to risks that could cause actual results to differ materially from projected performance. Key identified risks include: - High or rising interest rates that increase the company's borrowing costs and limit warehousing capacity for new originations. - Geopolitical risk from the ongoing Iran conflict, which is sustaining higher inflation and interest rates that pressure securitization pricing. - Economic downturns that would increase unemployment, drive higher loan defaults and delinquencies, and hurt credit performance. - Competitive shifts in the subprime auto lending market, though management noted limited new entry currently. - Delinquency and credit loss risk associated with faster originations growth, though management confirmed no credit concessions have been made to date.

No question-and-answer session was held during this conference call, so there are no exchanges to summarize.