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    CPSS
    Earnings call· Jun 2026(Q2 FY26)

    CONSUMER PORTFOLIO SERVICES Q2 FY26 earnings call CPSS

    Aug 5, 2026 Source

    Executive summary

    Consumer Portfolio Services Q2 FY26 — Strong Origination Growth and Improving Credit Trends

    Consumer Portfolio Services delivered a strong second quarter, marked by significant growth in loan originations driven by an expanded sales force and dealer network. The company maintained a tight credit box despite increased volume, leading to early signs of stable or improving credit quality. Management expressed optimism for continued growth through the remainder of the year, supported by favorable macro conditions and a stable competitive landscape.

    Highlights

    5

    • Originations volume increased over 40% quarter-to-quarter, reaching $758 million in Q2 FY26.

    • Fair value portfolio grew 18% year-over-year to $4.2 billion, yielding 11.3% net of credit losses.

    • Net income rose 30% year-over-year to $6.2 million in Q2 FY26.

    • Total delinquency (DQ > 30 days) decreased to 12.16% in Q2 FY26 from 13.14% in Q2 FY25.

    • Recovery rates improved to 33.3% in Q2 FY26, up from 30.4% in Q2 FY25, with newer vintages performing better.

    Concerns

    2

    • Interest expense increased 9% year-over-year to $64 million in Q2 FY26 due to higher securitization debt.

    • Extensions as a percentage of the portfolio were slightly up quarter-over-quarter.

    Guidance & targets

    2
    CategoryTargetConfidence
    Recovery rates
    trend higher
    medium materiality
    Medium
    Overall business outlook
    pretty good picture
    high materiality
    High

    Operational metrics

    30
    Fair value portfolio yield
    11.3%
    Q2 FY26

    Yield on the fair value portfolio.

    Pretax earnings
    $9 millionup 29% YoY
    Q2 FY26

    Pretax earnings for the second quarter.

    Pretax earnings
    $17.1 millionup 24% YoY
    6 months FY26

    Pretax earnings for the six months ended June 30.

    Net income
    $6.2 millionup 30% YoY
    Q2 FY26

    Net income for the second quarter.

    Net income
    $11.8 millionup 24% YoY
    6 months FY26

    Net income for the six months ended June 30.

    Cash (restricted and unrestricted)
    $180.2 millionup 12% YoY
    Q2 FY26

    Total cash balance as of June 30.

    Shareholders' equity
    $319.2 millionup 5% YoY
    Q2 FY26

    Record high shareholders' equity.

    Net interest margin (dollar amount)
    $53.9 millionup 15% YoY
    Q2 FY26

    Net interest margin in dollar terms for the second quarter.

    Net interest margin (dollar amount)
    $102.5 millionvs $93.7 million 6 months FY25
    6 months FY26

    Net interest margin in dollar terms for the six months ended June 30.

    Core operating expenses
    $48.1 millionup 9% YoY
    Q2 FY26

    Core operating expenses for the second quarter.

    Core operating expenses
    $92.3 millionup 3% YoY
    6 months FY26

    Core operating expenses for the six months ended June 30.

    Core operating expense as percentage of managed portfolio
    4.6%vs 4.8% Q2 FY25
    Q2 FY26

    Efficiency metric showing expenses relative to portfolio size.

    Core operating expense as percentage of managed portfolio
    4.6%vs 4.9% 6 months FY25
    6 months FY26

    Efficiency metric showing expenses relative to portfolio size for the six months.

    Return on managed assets
    0.9%vs 0.8% Q2 FY25
    Q2 FY26

    Return on managed assets for the second quarter.

    Return on managed assets
    0.8%vs 0.8% 6 months FY25
    6 months FY26

    Return on managed assets for the six months ended June 30.

    Sales representatives
    149up 60% since beginning of year; up 96% YoY
    end Q2 FY26

    Total number of sales representatives, driving dealer base expansion.

    New and reactivated dealers
    1,345
    Q2 FY26

    Number of new and reactivated dealers added in the second quarter.

    Active dealers
    11,889up 13% QoQ; up 84% YoY
    end Q2 FY26

    Record high active dealer base.

    Lending source mix
    2/3
    Q2 FY26

    Proportion of lending coming from franchise dealerships.

    Lending source mix
    1/3
    Q2 FY26

    Proportion of lending coming from independent dealerships.

    Applications received
    1.1 millionup 42% YoY
    Q2 FY26

    Total applications received in the second quarter.

    Approval percentage
    51%remains roughly flat
    Q2 FY26

    Percentage of applications approved, indicating underwriting selectivity.

    Repossessions
    downdown QoQ and YoY
    Q2 FY26

    Repossessions trending downward.

    Extensions as percentage of portfolio
    slightly upQoQ
    Q2 FY26

    Extensions increased slightly quarter-over-quarter.

    Recovery rate
    33.3%up from 30.4% Q2 FY25
    end Q2 FY26

    Overall recovery rate for the portfolio.

    Recovery rate by vintage
    22%
    Q2 FY26

    Recovery rate for the 2022 vintage.

    Recovery rate by vintage
    25%
    Q2 FY26

    Recovery rate for the 2023 vintage.

    Recovery rate by vintage
    37.5%
    Q2 FY26

    Recovery rate for the 2024 vintage.

    Recovery rate by vintage
    47.1%
    Q2 FY26

    Recovery rate for the 2025 vintage.

    Warehousing capacity
    over $900 million
    Q2 FY26

    Current warehousing capacity, deemed sufficient for operations.

    Industry KPIs

    8
    MetricValueDetails
    Funding mixsecuritization debt
    Delinquencies12.16%%
    Credit quality mixflat
    Net charge off rate7.28%%
    Loans card receivables$4.2 billionUSD
    New accounts card acquisitions11,889dealers
    Billed business purchase volume$758 millionUSD
    Net interest margin yield on receivables11.3%%

    Risks & headwinds

    2
    Interest rate environment

    not coming down or going up

    Mitigation: None explicitly stated, but management hopes for rates to stabilize or decrease.

    Geopolitical events affecting interest rates

    Iran war

    Mitigation: None explicitly stated, but management hopes for resolution to ease inflation and rates.

    What to watch in Q3 FY26

    4

    Origination volume growth

    next quarter
    Currentup over 40% QoQ
    Targetcontinued strong growth

    Why it matters

    Sustained origination growth is key to portfolio expansion and future revenue generation.

    The second quarter, we might have thought March is always a very good month for originations. So we kind of were hesitant to call out a big change. But by now, we can certainly say it's been an enormous change in terms of our originations volume quarter-to-quarter, it's up over 40%. It remains very strong. So it's probably the biggest and most important thing that's happened in the second quarter. And if we can keep that rolling along, it means very good things for the future.

    2 min read5 chapters

    Detailed Narrative

    01

    Origination Growth and Market Expansion

    Consumer Portfolio Services experienced a significant surge in originations, with Q2 FY26 volume up over 40% quarter-over-quarter and 75% year-over-year to $758 million. This growth was fueled by a substantial expansion of the sales force, increasing from 93 representatives at the end of 2025 to 149 by Q2 FY26, a 60% rise. The active dealer base also grew by 84% year-over-year to 11,889, with 1,345 new and reactivated dealers added in the quarter. Applications received increased 42% year-over-year to 1.1 million.

    02

    Credit Quality and Underwriting Discipline

    Despite the rapid growth in originations, management emphasized maintaining a tight credit box. The approval percentage remained flat at approximately 51%, indicating continued selectivity in contracts purchased. Key credit metrics showed improvement, with total delinquency (DQ > 30 days) decreasing to 12.16% in Q2 FY26 from 13.14% in Q2 FY25. Net charge-offs also trended downward to 7.28% from 7.45% year-over-year.

    03

    Improving Recovery Rates

    A critical element of the business, recovery rates, showed upward momentum, rising to 33.3% at the end of Q2 FY26 from 30.4% in Q2 FY25. This improvement is attributed to older vintages (2022 and 2023) flushing out of the portfolio, as newer vintages demonstrate significantly higher recovery rates (e.g., 2025 vintage at 47.1% compared to 2022 vintage at 22%). Management expects this trend to continue through the end of the year.

    04

    Financial Performance Highlights

    Revenues for Q2 FY26 increased 11% year-over-year to $121.4 million, while net income grew 30% to $6.2 million, resulting in diluted EPS of $0.27. The fair value portfolio expanded 18% year-over-year to $4.2 billion, yielding 11.3% net of credit losses. Core operating expenses grew at a slower rate of 3% for the six months, leading to improved efficiency, with core operating expense as a percentage of the managed portfolio decreasing to 4.6% from 4.8%.

    05

    Industry Landscape and Macro Factors

    The competitive landscape remains stable with no new significant entrants, and the securitization market continues to be strong, enabling the company to finance its growing portfolio. Management highlighted favorable macro conditions, particularly low unemployment, as a key driver for their business. While interest rates remain a factor, the overall regulatory environment (CFPB) is currently seen as benign, contributing to a positive outlook for the remainder of 2026.

    AI-generated summary of the company’s earnings call. Not investment advice.