Consumer Portfolio Services, Inc.

Good day, everyone, and welcome to the Consumer Portfolio Services 2025 Fourth Quarter and Full Year 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 dependent on estimates of future events, are also forward-looking statements. All such forward-looking statements are subject to risks that could cause actual results to differ materially from those projected. I refer you to the company's annual report filed March 12, 2025, 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 and welcome everyone to the fourth quarter and year-end conference call. 2025 was a very good year. We might have actually expected it to be even better, but we didn't quite get the growth we were looking for. But still, overall, a very strong year. We focused on credit. We focused on keeping our margins. All in all, it was very good. A couple of highlights. We renewed or actually we signed a new warehouse line with Capital One for $150 million. We also signed a $900 million prime forward flow commitment. Both of those will be very instrumental in how we grow and what we're going to do in 2026. But more highlighting that is the fact that credit is readily available. The company has done well enough to where lots of people, banks and such, not to mention the investors on the securizations, are very eager to either buy our bonds or lend us money. So we're in a very good spot in terms of moving into 2026. you know, as a quick peek, already looks like it could be very, very good. So 25 was really good. Again, we had focused on getting the 22 and 23 paper was not particularly profitable and didn't perform as well as we would have liked. I think at the beginning of 25, that was almost 40% or more of the portfolio. Today it's 26. We would expect that number to gradually decrease over the year to where it's de minimis by the end of 26. So getting that kind of piece of bad credit out of the portfolio is very good. Portfolio is nearly $4 billion. We expect that to grow substantially in the coming year. We've now reached a size where, you know, we're really at a good size in terms of our industry standing. Overall, we're in a very good position. Credit remains strong. Interest rates look good. We'll get back to that more, but for now, I'll turn it over to Danny to go through the financials.

Thank you, Brad. Looking at some of the numbers, revenues for the fourth quarter, 109.4%. is a 4% increase over the 105.3 in the fourth quarter of 2024. For the full year 2025, revenues were $434 million, is a 10% increase over the $393 million in 2024. The interest income on our fair value portfolio is the main driver of that, of our total revenues, and that is actually up 16% year over year. The fair value portfolio now sits at $3.6 billion and is yielding 11.4%, remembering that that yield is net of expected losses. Outside of interest income, the other component of our revenues are our fair value marks. These are adjustments to our fair value portfolio that we occasionally record to revenues as needed. We had no marks in the fourth quarter of 2025 compared to $5 million in the fourth quarter of the year before. For the full year, we had fair value marks of $6.5 million compared to $21 million the prior year. In terms of expenses for the fourth quarter, $102.2 million is a 4% increase over the $98 million in the fourth quarter of 2024. For the full year 25, expenses were $406 million, which is 11% higher than the $366 million in 2024. The biggest component of that increase is interest expense. Interest expense is $59 million in the fourth quarter. It's $53 million in the fourth quarter a year ago, and that's a 13% increase. That increase is largely due to our higher securitization debt balance. from our higher loan portfolio. Our loan portfolio, which I'll cover when we look at the balance sheet, but the loan portfolio is actually the securitization debt from that loan portfolio is up 15% year over year. Looking at pre-tax earnings, $7.2 million for the fourth quarter compared to $7.4 million in 2024. For the full year, pre-tax earnings was $28 million. compared to $27.4 million for the full year 2024. If you look deeper into the numbers and exclude the fair value marks, pre-tax income would have been $7.2 million in the fourth quarter compared to $2.4 million in the fourth quarter of 2024. So there is some significant improvement there if you strip out the marks and focus on interest income. For the full year, The pre-tax income would have been 21.5 million in 2025 compared to 6.4 million in 2024. So again, there's significant improvement in 2025 if you exclude the non-recurring items. Net income for the quarter, 5 million compared to 5.1 in the fourth quarter of 24. For the full year, net income 19.3 million compared to 19.2 million in 2024. Similar trends for net income as pre-tax income, but again, if you exclude the fair value marks in 2024, which were higher than 25, there is significant improvement there. Diluted earnings per share, 21 cents is flat from the 21 cents in the fourth quarter last year. For the full year, 80 cents versus 79 cents in 2024. Moving now to the balance sheet, our total cash and restricted cash is finished the year at $172.2 million, which is up from $137.4 million at the end of 2024. Our fair value portfolio is up 10% to $3.655 billion compared to $3.3 billion at the end of 2024. Looking at our debt, I guess the biggest jump would be from our securitization debt we talked about earlier. 15% higher to $2.986 billion compared to $2.594 billion in the prior year. Moving to shareholders' equity, the $309.5 million ending balance for equity at the end of December 2025 is a 6% increase, over $292.8 million at the end of 2024. Equity continues to climb and currently sits on an all-time high for us, This translates to a book value when measured on a fully diluted basis to about $13 a share. Looking at other important metrics, our net interest margin, $50.1 million in the fourth quarter compared to $52.8 million in the fourth quarter of 24. Full year net interest margin, $202.5 million, splat from $202.3 million in 2024. Again, the marks Less marks in 2025 from the fair value portfolio has an impact on that. If you strip that out, the net interest margin would have been 50.1 million versus 47.8. And for the full year, 196 million versus 181 million, which is an 8% increase year over year. Our core operating expenses, 43.4 million in the fourth quarter compared to 46.2 is a 6% decrease. For the full year, core operating expenses of $177 million is down 2% from $180 million last year. So besides growing our auto loan portfolio and increasing our interest income, we've also put a lot of focus on improving operating efficiencies, which you can see in the decline in our core operating expenses as a percentage of the managed portfolio, which is now down to 4.8%. from 5.6% a year ago. I will turn the call over to Mike.