Consumer Portfolio Services, Inc.

Hello everyone and welcome to the Consumer Portfolio Services 2025 Third Quarter Operating Results Conference Call. Today's call is being recorded. Before we begin, management has asked me to inform you that this conference call may contain forward-looking statements. Any statements made during this call that are not statements of historical facts may be deemed forward-looking statements. statements regarding current or historical valuation of receivables because depends on estimates of future events also are forward-looking statements. All such forward-looking statements are subject to risk that could cause actual results to differ materially from those projected. I refer you to the company's annual report filed March 12th for further clarification. The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, further events, or otherwise. With us here is Mr. Charles Bradley, Chief Executive Officer, Mr. Danny Barwani, Chief Financial Officer, and Mr. Mike Levin, President and Chief Operating Officer of Consumer Portfolio Services. I will now turn the call over to Mr. Bradley.

Thank you. Good morning, everyone. Welcome to our third quarter conference call. I think, for the most part, it's three quarters in the books. The year is proceeding kind of pretty much exactly what we would expect, with a small exception of we haven't really grown as much as we wanted. We had pretty high hopes for growth this year. We've had some growth, but very what we'll call modest growth as opposed to more aggressive growth, which is probably okay. Generally speaking, if you look back at the last few calls, we've sort of been in not really a holding pattern, but in a wait and see pattern in two ways. We wanted to see, you know, get sort of the 22 and 23 portion of the portfolio to shrink and see if we can get that to perform as best we could, even though it wasn't particularly great paper. And then on the flip side, we wanted the 24 and 25 vintages to really prove out that we, in fact, have much better credit. And I think, as I mentioned in previous calls, little by little, the 24 and 25 have all proven to be better. From 23C on, from D to all the 24 deals and the 25 deals, each one has improved better performance-wise, better than the previous one. Now, it's still early, certainly for the 25 deals, but, you know, it's the trend we wanted. It's a trend we've been kind of waiting to see before we tried to get overly aggressive. And again, on the other side, we want to keep the 23 and the 22 paper running off because that paper isn't performing great. Compared to others, it did fine, but compared to what we want, it hasn't done as well as we had hoped, and it's now become a much smaller part of the portfolio. It's down below 30%. And certainly, as time goes by, that number goes down, the percentage of the good paper goes up, and the mix will change and probably create a very good forward-looking program as we go. In terms of the quarter, you know, we did add a new credit line just after the quarter, so that was a big plus. So we now have tons of funding. Also, we did a securitization in what could be termed somewhat the more difficult market due to the tricolor problems. Good news in that front is we've never, we've always had a third-party custodian. We've never had control over our collateral. We have none of the issues that cause their problems. As much as, you know, we can tell everybody that, it's still put a little bit of a cloud in the industry while we're trying to get a securitization done. And it's important that even so, we were pretty easily able to get the securitization done Slightly more expensive than we had hoped, but nonetheless, as I've said numerous times, getting securitization done, getting them done is the most important thing we have to do. You have to be able to securitize the paper, otherwise we have serious problems. But overall, quarters worked fine. I'll get back to some more specifics on that after we go through the rest of the material. I'm going to turn it over to Danny to go through the financials.

Thank you, Brad. Going over the financials, revenues for the quarter, 108.4 million is up 8% from the third quarter of last year, which was 100.6. For the nine months ending September 2025, revenues were 325.1, which is a 13% increase over the 288 million in the nine months ending September 2024. Two things of note driving revenue. Our fair value portfolio is now up to 3.6 billion. That is yielding 11.4% net of losses. And the other thing of note for top line revenue is that we did not have a fair value mark this quarter. We did have a 5.5 million mark in the third quarter of last year. Moving to expenses, 101.4 million in the third quarter this year is also up 8% over the 93.7 million in the third quarter of 2024. For the nine months ending September 25, $304.3 million of expenses is up 14% from the $268.1 million last year. Interest expense is the main driver of the increase in expenses, and it's largely due to our increasing securitization debt as the volume has picked up. over the last year. Pre-tax earnings is $7 million compared to $6.9 million last year. For the nine months, $21 million of pre-tax earnings is up 4% from $20.1 million in 2024. Likewise, net income of $4.9 million is also 2% higher than the third quarter of last year. The nine months ending September 25, Net income was 14.3 million, is at 1% from 14.1 million last year. And finally, diluted earnings per share, 20 cents per share is flat from last year. For the nine months, 59 cents compared to 58 cents last year. Moving to the balance sheet, cash and restricted cash is 151.9 million for the third quarter of this year. Finance receivables, which is mostly now our fair value portfolio, that is up 16%. So the fair value portfolio is $3.62 billion as of this quarter compared to $3.13 billion last year. So that is up 16% largely due to origination volumes, as Brad alluded to earlier, origination volumes of $391.1 million for the third quarter. And 1.275 billion for the nine months ending September 25 is driving that increase in our fair value portfolio. Moving down the balance sheet, our total debt, which is the sum of our warehouse line credit debt, our residual interest financing, securitization debt, and long-term debt is 3.4 billion. This quarter, compared to 3.1 billion last year, that is an 11% increase. So what's happening is we've got a 16% increase on the asset side in our fair value portfolio and only 11% increase in the debt. So that's showing that we're able to manage with less leverage and is improving our balance sheet. That can be seen in our shareholders' equity number. $307.6 million this quarter is up 8% from the $285.1 million last year. Looking at other metrics, the net interest margin of $49.3 million this quarter compared to $50.5 million last year. For the nine months, $152.3 of net interest margin this year compared to $149.5 last year. Our core operating expenses of $43 million is down 4%. from the $44.6 million in the third quarter of last year. And for the nine months, it's flat, $134 million this year and last year. However, measured as the percentage of the managed portfolio, the core operating expense is down 4.6% this quarter compared to 5.4% in the third quarter of last year. So we're starting to see some improving efficiencies as we're able to manage the cost side of the business to allow the portfolio to grow without really seeing increases in cost. And lastly, the return on managed assets is flat, 0.8% this quarter compared to 0.8% in the third quarter of last year. I will turn the call over to Mike.