Consumer Portfolio Services NASDAQ: CPSS executives told investors the company’s securitization and residual financing programs remained “consistent” during the first quarter of 2026, while origination growth accelerated late in the quarter following an expanded dealer footprint and larger salesforce.
Securitization and financing activity
Chief Executive Officer Charles Bradley said the company completed a $345 million securitization during the quarter, which he described as “well received” with “no problems at all.” Bradley added that while the company would like to see interest rates decline, the ability to “buy a lot of paper and sell it all to Wall Street” remains a key part of its strategy.
Bradley also said the company completed another residual financing transaction and characterized demand and pricing as improving. “Each time we do a new residual financing, it’s probably more well-received each time along,” he said, adding that CPS is “getting a little better pricing as well.”
First-quarter financial results
Executive Vice President and Chief Financial Officer Danny Bharwani reported revenue of $112.3 million for the quarter, up 5% from $106.9 million in the first quarter of 2025. Bharwani attributed the increase primarily to interest income of $108.7 million, which rose 6.7% year over year, citing stronger loan originations.
On originations, Bharwani said CPS funded $533 million in new loans during the first quarter, an 18% increase from the prior-year period. He also said the company’s fair value portfolio was $3.8 billion and yielded 11.3% net of losses.
Bharwani noted that the year-ago quarter included a $3.5 million fair value mark, while there was no comparable mark in the first quarter of 2026.
Total expenses were $104.3 million, up 4% from $100.1 million in the year-ago quarter. Bharwani said interest expense increased to $60 million from $55 million a year earlier, which he attributed to higher debt balances associated with greater originations.
Pre-tax earnings were $8.0 million, up 18% from $6.8 million in the first quarter of 2025. Net income rose 18% to $5.5 million from $4.7 million, and diluted earnings per share increased to $0.24 from $0.19.
On the balance sheet, Bharwani said cash and restricted cash totaled $185.4 million, compared with $183.5 million as of March 31, 2025. The fair value portfolio increased to $3.8 billion from $3.45 billion a year earlier, and shareholders’ equity rose to $314.4 million, up 5% from the comparable 2025 quarter.
Bharwani reported net interest margin of 48.7% compared with 47.0% last year, and said core operating expenses declined 2% to $44.2 million from $45.2 million. He added that core operating expenses as a percentage of the managed portfolio fell to 4.6% from 5.1% a year earlier. Return on managed assets was 0.8%, flat year over year.
Origination surge, dealer expansion, and salesforce growth
President and Chief Operating Officer Mike Lavin said the company originated $533 million in new contracts in the quarter, and emphasized that March alone accounted for $250 million of that total. Lavin also said assets under management increased from $3.779 billion to $3.942 billion during the quarter, a 4.5% sequential increase, and were up from $3.61 billion in the first quarter of 2025.
Lavin attributed the growth to several operational initiatives:
- Adding new active dealers
- Hiring additional sales representatives
- Increasing application volume
- Improving capture rate
Lavin said CPS added 2,335 new and reactivated dealers during the quarter, bringing its active dealer base to 10,544—up 28% from the fourth quarter of 2025. He also said roughly two-thirds of lending comes from franchise dealerships and one-third from independent dealerships.
The company increased sales representatives to 124 at quarter-end from 96 at the end of the fourth quarter, a 29% increase, Lavin said. He added that average applications per month rose to 334,000, up 31% from 256,000 in the prior quarter, while the capture rate increased to 7.65% from 5.98%, a 28% quarter-over-quarter improvement.
Lavin said CPS implemented its “Gen 9 Credit model” in October 2025 and continues to originate under a “tight credit box.” He also said the underwriting and operations teams handled the increased volume without disruption, with funding time remaining under two days and an error rate under 8%.
Credit trends and customer affordability
On credit performance, Lavin said total delinquencies greater than 30 days were 11.58%, down from 12.35% in the first quarter of 2025. Annualized net charge-offs were 8.57% of average portfolios, compared with 7.54% a year earlier.
Lavin added that repossessions were down versus both the fourth quarter of last year and the first quarter of last year. Extensions as a percentage of the portfolio were up slightly quarter over quarter but lower than the first quarter of 2025.
He also pointed to affordability pressures for borrowers, saying the company’s average payment in the last month was $542, which he said was below the average used car payment of $562 and also below the average subprime payment.
Discussing loan vintages, Lavin said 2024 vintages improved over 2022 and 2023, and that performance improved significantly starting with “2024 B, C, and D.” He added that 2025 vintages were tracking closely with 2024, and said the 2022 and 2023 vintages are “running off quickly” and becoming a “nominal part of the portfolio going forward.”
Recoveries increased in the quarter to around 32%, Lavin said, up both quarter over quarter and compared with the first quarter of 2025. He attributed prior pressure on recoveries to 2022 and 2023 vintages and said the runoff of those vintages is contributing to improvement.
Industry and macro commentary
Bradley said industry conditions remained stable, describing the environment as “all quiet,” with no “hiccups” and “no new entrants.” He added that the competitive landscape appears more consolidated, with “a handful of large players,” and said CPS is seeing growth benefits as some smaller competitors “fall away in the lower end.”
Bradley also discussed interest-rate sensitivity and geopolitical uncertainty, saying it would be “nice if the Iran war ended” because it could help interest rates. He added that despite market turbulence, CPS has not experienced issues executing securitizations and that portfolio performance “seems fine.”
Looking ahead, Bradley said the company’s recent investments in geographic expansion, dealer relationships, and sales capacity are beginning to pay off, noting that while January and February were “a bit slow or normal,” March “took off.” He said the second quarter “should be… very interesting” in terms of origination growth and added that both the first and second quarters “look real good” from the company’s perspective.
About Consumer Portfolio Services NASDAQ: CPSS
Consumer Portfolio Services, Inc is a specialty finance company focused on originating and servicing retail installment contracts for the automotive industry. The company primarily serves subprime and near-prime borrowers by partnering with a network of franchised and independent auto dealers across the United States. By providing flexible financing solutions, CPS seeks to expand vehicle ownership opportunities for customers who may not qualify for traditional prime auto loans.
CPS operates through two principal segments: loan origination and servicing.
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