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What changed in CONSUMER PORTFOLIO SERVICES, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CONSUMER PORTFOLIO SERVICES, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+237 added−292 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-15)

Top changes in CONSUMER PORTFOLIO SERVICES, INC.'s 2024 10-K

237 paragraphs added · 292 removed · 217 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

56 edited+5 added−6 removed127 unchanged
Biggest changeDelinquency, Repossession and Extension Experience Delinquency and Extension Experience (1) Total Managed Portfolio (Excludes Third Party Portfolio) December 31, 2023 December 31, 2022 December 31, 2021 Number of Contracts Amount Number of Contracts Amount Number of Contracts Amount (Dollars in thousands) Delinquency Experience Gross servicing portfolio (1) 179,198 $ 2,970,066 170,658 $ 2,795,383 154,151 $ 2,209,430 Period of delinquency (2) 31-60 days 13,337 210,200 13,434 201,764 10,895 146,904 61-90 days 6,717 104,144 5,481 80,146 3,939 51,069 91+ days 3,252 50,610 2,148 31,036 1,171 14,279 Total delinquencies (2) 23,306 364,954 21,063 312,946 16,005 212,252 Amount in repossession (3) 4,653 67,182 2,904 41,401 1,882 22,912 Total delinquencies and amount in repossession (2) 27,959 $ 432,136 23,967 $ 354,347 17,887 $ 235,164 Delinquencies as a percentage Delinquencies as a percentage of gross servicing portfolio 13.0% 12.3% 12.3% 11.2% 10.4% 9.6% Total delinquencies and amount in repossession as a percentage of gross servicing portfolio 15.6% 14.5% 14.0% 12.7% 11.6% 10.6% Extension Experience Contracts with one extension, accruing 33,920 $ 610,617 27,584 $ 464,323 23,740 $ 328,128 Contracts with two or more extensions, accruing 42,462 563,308 38,714 417,682 46,541 513,183 76,382 1,173,926 66,298 882,005 70,281 841,311 Contracts with one extension, non-accrual (4) 2,367 38,933 981 14,792 597 7,736 Contracts with two or more extensions, non-accrual (4) 2,081 27,497 1,485 15,395 1,414 15,128 4,448 66,430 2,466 30,187 2,011 22,864 Total accounts with extensions 80,830 $ 1,240,355 68,764 $ 912,192 72,292 $ 864,175 (1) All amounts and percentages are based on the amount remaining to be repaid on each automobile contract.
Biggest changeThe tables below document the delinquency, repossession, and net credit loss experience of all such automobile contracts that we own as of the respective dates shown. 8 Delinquency, Repossession and Extension Experience December 31, 2024 December 31, 2023 December 31, 2022 Number of Number of Number of Contracts Amount Contracts Amount Contracts Amount Delinquency Experience (Dollars in thousands) Gross servicing portfolio (1) 201,441 $ 3,490,960 179,198 $ 2,970,066 170,658 $ 2,795,383 Period of delinquency (2) 31-60 days 14,643 243,068 13,337 210,200 13,434 201,764 61-90 days 7,244 114,633 6,717 104,144 5,481 80,146 91+ days 4,477 65,081 3,252 50,610 2,148 31,036 Total delinquencies (2) 26,364 422,782 23,306 364,954 21,063 312,946 Amount in repossession (3) 6,227 95,620 4,653 67,182 2,904 41,401 Total delinquencies and amount in repossession (2) 32,591 $ 518,402 27,959 $ 432,136 23,967 $ 354,347 Delinquencies as a percentage of gross servicing portfolio 13.1% 12.1% 13.0% 12.3% 12.3% 11.2% Total delinquencies and amount in repossession as a percentage of gross servicing portfolio 16.2% 14.8% 15.6% 14.5% 14.0% 12.7% Extension Experience Contracts with one extension, accruing 33,623 $ 601,049 33,920 $ 610,617 27,584 $ 464,323 Contracts with two or more extensions, accruing 47,227 701,158 42,462 563,308 38,714 417,682 80,850 1,302,207 76,382 1,173,925 66,298 882,005 Contracts with one extension, non-accrual (4) 3,483 53,018 2,367 38,933 981 14,792 Contracts with two or more extensions, non-accrual (4) 4,052 60,660 2,081 27,497 1,485 15,395 7,535 113,678 4,448 66,430 2,466 30,187 Total accounts with extensions 88,385 $ 1,415,885 80,830 $ 1,240,355 68,764 $ 912,192 (1) All amounts and percentages are based on the amount remaining to be repaid on each automobile contract.
Credit and underwriting functions are performed primarily in our California branch with certain of these functions also performed in our Florida, Nevada, and Virginia branches. We service our automobile contracts from our California, Nevada, Virginia, Florida, and Illinois branches. Most of our contract acquisitions volume results from our purchases of retail installment sales contracts from franchised or independent automobile dealers.
Credit and underwriting functions are performed primarily in our California branch with certain of these functions also performed in our Florida and Nevada branches. We service our automobile contracts from our California, Nevada, Virginia, Florida, and Illinois branches. Most of our contract acquisitions volume results from our purchases of retail installment sales contracts from franchised or independent automobile dealers.
In addition, we contact each customer by telephone to confirm that the customer understands and agrees to the terms of the related automobile contract. During this “ welcome call, ” we also ask the customer a series of open-ended questions about his application and the contract, which may uncover potential misrepresentations. Credit Scoring .
In addition, we contact each customer by telephone to confirm that the customer understands and agrees to the terms of the related automobile contract. During this " welcome call, " we also ask the customer a series of open-ended questions about his application and the contract, which may uncover potential misrepresentations. Credit Scoring .
In the case of repossession, the amount of the charge-off is the difference between the outstanding principal balance of the defaulted automobile contract and the net repossession sale proceeds. 8 Credit Experience Our primary method of monitoring ongoing credit quality of our portfolio is to closely review monthly delinquency, default and net charge off activity and the related trends.
In the case of repossession, the amount of the charge-off is the difference between the outstanding principal balance of the defaulted automobile contract and the net repossession sale proceeds. Credit Experience Our primary method of monitoring ongoing credit quality of our portfolio is to closely review monthly delinquency, default and net charge off activity and the related trends.
Contract Funding For automobile contracts that we purchase from dealers, we require that the contract be originated by a dealer that has entered into a dealer agreement with us. Under our direct lending platform, we require the customer to sign a note and security agreement.
Contract Funding For automobile contracts that we purchase from dealers, we require that the contract be originated by a dealer that has entered into a dealer agreement with us. Under our direct lending platform, we required the customer to sign a note and security agreement.
For the year ended December 31, 2023, our automated application decisioning system produced our initial decision within seconds on approximately 99% of those applications. Upon receipt an application, if the application meets certain minimum criteria, we immediately order two credit reports to document the buyer’s credit history and an alternative data credit score provided by a major credit reporting bureau.
For the year ended December 31, 2024, our automated application decisioning system produced our initial decision within seconds on approximately 99% of those applications. Upon receipt an application, if the application meets certain minimum criteria, we immediately order two credit reports to document the buyer’s credit history and an alternative data credit score provided by a major credit reporting bureau.
In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers and acquisitions in 2002, 2003, 2004 and 2011. Contract purchase volumes and managed portfolio levels for the five years ended December 31, 2023 are shown in the table below. Managed portfolio comprises both contracts we owned and those we were servicing for third parties.
In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers and acquisitions in 2002, 2003, 2004 and 2011. Contract purchase volumes and managed portfolio levels for the five years ended December 31, 2024 are shown in the table below. Managed portfolio comprises both contracts we owned and those we were servicing for third parties.
As of December 31, 2023, approximately 72% of our active dealers were franchised new car dealers that sell both new and used vehicles, and the remainder were independent used car dealers. 1 We have in the past solicited credit applications directly from prospective automobile consumers through the internet under a program we refer to as our direct lending platform.
As of December 31, 2024, approximately 72% of our active dealers were franchised new car dealers that sell both new and used vehicles, and the remainder were independent used car dealers. 1 We have in the past solicited credit applications directly from prospective automobile consumers through the internet under a program we refer to as our direct lending platform.
As of December 31, 2023, our nearshore partner had approximately 47 agents assigned to our portfolio. 7 We attempt to make telephonic contact with delinquent customers from one to 20 days after their monthly payment due date, depending on our risk-based assessment of the customer’s likelihood of payment during early stages of delinquency.
As of December 31, 2024, our nearshore partner had approximately 47 agents assigned to our portfolio. 7 We attempt to make telephonic contact with delinquent customers from one to 20 days after their monthly payment due date, depending on our risk-based assessment of the customer’s likelihood of payment during early stages of delinquency.
In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2023, we were in compliance with all such covenants. Competition The automobile financing business is highly competitive.
In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2024, we were in compliance with all such covenants. Competition The automobile financing business is highly competitive.
In this residual interest financing transaction, qualified institutional buyers purchased $50.0 million of asset-backed notes secured by residual interests in three CPS securitizations consecutively conducted from January 2018 through July 2018, and an 80% interest in a CPS affiliate that owns the residual interests in the eight CPS securitizations conducted from December 2018 through September 2020.
In this residual interest financing transaction, qualified institutional buyers purchased $50.0 million of asset-backed notes secured by residual interests in three CPS securitizations consecutively conducted from January 2018 through July 2018, and an 80% interest in a CPS affiliate that owns the residual interests in the eight CPS securitizations conducted from October 2018 through September 2020.
We generally do not finance vehicles that are more than 12 model years old or have more than 200,000 miles. The maximum term of a purchased contract is 78 months, although we consider the program, amount financed, and mileage as significant factors in determining the maximum term of a contract.
We generally do not finance vehicles that are more than 15 model years old or have more than 200,000 miles. The maximum term of a purchased contract is 78 months, although we consider the program, amount financed, and mileage as significant factors in determining the maximum term of a contract.
We then advise the applicant as to whether we would grant them credit and on what terms. The following table sets forth the geographical sources of the automobile contracts we originated (based on the addresses of the customers as stated on our records) during the years ended December 31, 2023 and 2022.
We then advise the applicant as to whether we would grant them credit and on what terms. The following table sets forth the geographical sources of the automobile contracts we originated (based on the addresses of the customers as stated on our records) during the years ended December 31, 2024 and 2023.
We do not record an expense for provision for credit losses on these receivables because such credit losses are included in our computation of the appropriate level yield. Since 1994 we have conducted 99 term securitizations of automobile contracts that we originated under our regular programs.
We do not record an expense for provision for credit losses on these receivables because such credit losses are included in our computation of the appropriate level yield. Since 1994 we have conducted 103 term securitizations of automobile contracts that we originated under our regular programs.
Dealers with which we do business are under no obligation to submit any automobile contracts to us, nor are we obligated to purchase any automobile contracts from them. During the year ended December 31, 2023, no dealer accounted for as much as 2% of the total number of automobile contracts we purchased.
Dealers with which we do business are under no obligation to submit any automobile contracts to us, nor are we obligated to purchase any automobile contracts from them. During the year ended December 31, 2024, no dealer accounted for as much as 2% of the total number of automobile contracts we purchased.
We consider accounts that have had extensions and were active or paid off as of December 31, 2023 to be successful. Successful extensions result in continued payments of interest and principal (including payment in full in many cases).
We consider accounts that have had extensions and were active or paid off as of December 31, 2024 to be successful. Successful extensions result in continued payments of interest and principal (including payment in full in many cases).
We use proprietary scoring models to assign two internal “credit scores” at the time the application is received. These proprietary scores are used to help determine whether we want to approve the application and, if so, the program and pricing we will offer either to the dealer, or in the case of our direct lending platform, directly to the customer.
We use proprietary scoring models to assign two internal "credit scores" at the time the application is received. These proprietary scores are used to help determine whether we want to approve the application and, if so, the program and pricing we will offer either to the dealer, or in the case of our direct lending platform, directly to the customer.
The weighted average seasoning of our total owned portfolio, represented in the tables below, was 19 months, 17 months, and 21 months as of December 31, 2023, December 31, 2022, and December 31, 2021, respectively. Our financial results are dependent on the performance of the automobile contracts in which we retain an ownership interest.
The weighted average seasoning of our total owned portfolio, represented in the tables below, was 17 months, 19 months, and 17 months as of December 31, 2024, December 31, 2023, and December 31, 2022, respectively. Our financial results are dependent on the performance of the automobile contracts in which we retain an ownership interest.
The following table identifies the credit program, sorted from highest to lowest credit quality, under which we originated automobile contracts during the years ended December 31, 2023 and 2022.
The following table identifies the credit program, sorted from highest to lowest credit quality, under which we originated automobile contracts during the years ended December 31, 2024 and 2023.
They may work from our Irvine branch, our Las Vegas branch, or in the field, in which case they work from their homes and support dealers in their geographic area.
They may work from our Irvine branch, our Las Vegas branch, or in the field, in which case they work remotely and support dealers in their geographic area.
A portion of the DealerTrack and Route One volume are applications from our pass-through arrangements with other lenders who send us applications from their dealers in cases where those lenders choose not to approve those applications. For the year ended December 31, 2023, such pass-through applications represented 37% of our total applications.
A portion of the DealerTrack and Route One volume are applications from our pass-through arrangements with other lenders who send us applications from their dealers in cases where those lenders choose not to approve those applications. For the year ended December 31, 2024, such pass-through applications represented 41% of our total applications.
(4) We do not recognize interest income on accounts past due more than 90 days. 9 Net Credit Loss Experience (1) Total Managed Portfolio (Excludes Third Party Portfolio) Year Ended December 31, 2023 2022 2021 (Dollars in thousands) Average portfolio outstanding $ 2,913,571 $ 2,539,110 $ 2,147,611 Net charge-offs as a percentage of average portfolio (2) 6.5% 4.5% 3.5% (1) All amounts and percentages are based on the principal amount scheduled to be paid on each automobile contract contracts.
(4) We do not recognize interest income on accounts past due more than 90 days. 9 Net Credit Loss Experience (1) Total Managed Portfolio (Excludes Third Party Portfolio) Year Ended December 31, 2024 2023 2022 (Dollars in thousands) Average portfolio outstanding $ 3,209,988 $ 2,913,571 $ 2,539,110 Net charge-offs as a percentage of average portfolio (2) 7.6% 6.5% 4.5% (1) All amounts and percentages are based on the principal amount scheduled to be paid on each automobile contract contracts.
The feedback from the meetings and survey results are reviewed by senior management and used to assist in reviewing our human capital strategies, programs, and practices. Our COO holds town hall meetings in every branch and virtual sessions to provide company-wide updates and conduct open Q&A for all employees.
The feedback from the meetings and survey results are reviewed by senior management and used to assist in reviewing our human capital strategies, programs, and practices. Our COO holds town hall meetings to provide company-wide updates and conduct open Q&A for all employees.
Our recent history of term securitizations is summarized in the table below: Recent Asset-Backed Securitizations $ in thousands Period Number of Term Securitizations Amount of Receivables 2017 4 $ 870,000 2018 4 883,452 2019 4 1,014,124 2020 3 741,867 2021 4 1,145,002 2022 4 1,537,383 2023 4 1,352,114 From time to time we have also completed financings of our residual interests in other securitizations that we and our affiliates previously sponsored.
Our recent history of term securitizations is summarized in the table below: Recent Asset-Backed Securitizations $ in thousands Period Number of Term Securitizations Amount of Receivables 2018 4 883,452 2019 4 1,014,124 2020 3 741,867 2021 4 1,145,002 2022 4 1,537,383 2023 4 1,352,114 2024 4 1,533,854 From time to time we have also completed financings of our residual interests in other securitizations that we and our affiliates previously sponsored.
As of December 31, 2023, 18 of those securitizations are active and all are structured as secured financings. We generally conduct our securitizations on a quarterly basis, near the beginning of each calendar quarter, resulting in four securitizations per calendar year. However, we completed only three securitizations in 2020.
As of December 31, 2024, 17 of those securitizations are active and all are structured as secured financings. We generally conduct our securitizations on a quarterly basis, near the beginning of each calendar quarter, resulting in four securitizations per calendar year. However, we completed only three securitizations in 2020.
Our upper credit tier products, which are our Meta, Preferred, Super Alpha, Alpha Plus and Alpha programs, accounted for approximately 83% of our new contract acquisitions for our own portfolio in 2023, 80% in 2022, and 75% in 2021, measured by aggregate amount financed.
Our upper credit tier products, which are our Meta, Preferred, Super Alpha, Alpha Plus and Alpha programs, accounted for approximately 89% of our new contract acquisitions for our own portfolio in 2024, 83% in 2023, and 80% in 2022, measured by aggregate amount financed.
To this end, we utilize pro-active collection procedures, which include making early and frequent contact with delinquent customers; educating customers as to the importance of maintaining good credit; and employing a consultative and customer service approach to assist the customer in meeting his or her obligations, which includes attempting to identify the underlying causes of delinquency and cure them whenever possible.
To this end, we utilize pro-active collection procedures, which include making early and frequent contact with delinquent customers; educating customers as to the importance of making payments according to their contract schedule; and employing a consultative and customer service approach to assist the customer in meeting his or her obligations, which includes attempting to identify the underlying causes of delinquency and cure them whenever possible.
Our current short-term funding capacity is $400 million, comprising two credit facilities. The first credit facility was established in May 2012. This facility was most recently renewed in July 2022, extending the revolving period to July 2024, with an optional amortization period through July 2025.
Our current short-term funding capacity is $535 million, comprising two credit facilities. The first credit facility was established in May 2012. This facility was most recently renewed in July 2024, extending the revolving period to July 2026, with an optional amortization period through July 2027.
Contract Purchases and Outstanding Managed Portfolio $ in thousands Year Contracts Purchased in Period Managed Portfolio at Period End 2019 $ 1,002,782 $ 2,416,042 2020 742,584 2,174,972 2021 1,146,321 2,249,069 2022 1,854,385 3,001,308 2023 1,357,752 3,194,623 Our principal executive offices are in Las Vegas, Nevada. Most of our operational and administrative functions take place in Irvine, California.
Contract Purchases and Outstanding Managed Portfolio $ in thousands Year Contracts Purchased in Period Managed Portfolio at Period End 2020 742,584 2,174,972 2021 1,146,321 2,249,069 2022 1,854,385 3,001,308 2023 1,357,752 3,194,623 2024 1,681,941 3,665,725 Our principal executive offices are in Las Vegas, Nevada. Most of our operational and administrative functions take place in Irvine, California.
The sold notes (“2021-1 Notes”), issued by CPS Auto Securitization Trust 2021-1, consist of a single class with a coupon of 7.86%. As of December 31, 2023, the notes had a principal balance of $50.0 million. Generally, prior to a securitization transaction we fund our automobile contract acquisitions primarily with proceeds from warehouse credit facilities.
The sold notes (“2024-1 Notes”), issued by CPS Auto Securitization Trust 2024-1, consist of a single class with a coupon of 11.50%. As of December 31, 2024, the notes had a principal balance of $50.0 million. Generally, prior to a securitization transaction we fund our automobile contract acquisitions primarily with proceeds from warehouse credit facilities.
Dealers can send credit applications to us by entering the necessary data on our website or through one of two third-party application aggregators. For the year ended December 31, 2023, we received 2.9 million applications. Approximately 63% of all applications came through DealerTrack (the industry leading dealership application aggregator), 37% via another aggregator, Route One.
Dealers can send credit applications to us by entering the necessary data on our website or through one of two third-party application aggregators. For the year ended December 31, 2024, we received 3.3 million applications. Approximately 57% of all applications came through DealerTrack (the industry leading dealership application aggregator), 43% via another aggregator, Route One.
The table below compares certain characteristics, at the time of origination, of our contract purchases for the years ended December 31, 2023 and 2022: Contracts Purchased During the Year Ended December 31, 2023 December 31, 2022 Average Original Amount Financed $ 20,845 $ 22,632 Weighted Average Original Term 67 months 70 months Average Down Payment Percent 10.7% 10.5% Average Vehicle Purchase Price $ 19,651 $ 21,122 Average Age of Vehicle 7 years 7 years Average Age of Customer 42 years 42 years Average Time in Current Job 5 years 4 years Average Household Annual Income $ 72,930 $ 69,121 Dealer Compliance .
The table below compares certain characteristics, at the time of origination, of our contract purchases for the years ended December 31, 2024 and 2023: Contracts Purchased During the Year Ended December 31, 2024 December 31, 2023 Average Original Amount Financed $ 21,931 $ 20,845 Weighted Average Original Term 71 months 67 months Average Down Payment Percent 10.7% 10.7% Average Vehicle Purchase Price $ 20,499 $ 19,651 Average Age of Vehicle 7 years 7 years Average Age of Customer 42 years 42 years Average Time in Current Job 5 years 5 years Average Household Annual Income $ 74,655 $ 72,930 Dealer Compliance .
In this report, we refer to all of such contracts and loans as “automobile contracts.” We were incorporated and began our operations in March 1991. From inception through December 31, 2023, we have purchased a total of approximately $21.3 billion of automobile contracts from dealers.
In this report, we refer to all of such contracts and loans as "automobile contracts." We were incorporated and began our operations in March 1991. From inception through December 31, 2024, we have purchased a total of approximately $23.0 billion of automobile contracts from dealers.
The following table summarizes the average net acquisition fees we charged dealers and the weighted average annual percentage rate on contracts purchased for our own portfolio for the periods shown: 2023 2022 2021 2020 2019 Average net acquisition fee charged (paid) to dealers (1) $ 98 $ (150 ) $ (65 ) $ 71 $ (25 ) Average net acquisition fee as % of amount financed (1) 1.3% -0.7% -0.3% 0.4% -0.1% Weighted average annual percentage interest rate 20.9% 18.4% 17.8% 19.3% 19.2% (1) Not applicable to direct lending platform.
The following table summarizes the average net acquisition fees we charged dealers and the weighted average annual percentage rate on contracts purchased for our own portfolio for the periods shown: 2024 2023 2022 2021 2020 Average net acquisition fee charged (paid) to dealers (1) $ (50 ) $ 98 $ (150 ) $ (65 ) $ 71 Average net acquisition fee as % of amount financed (1) -0.2% 1.3% -0.7% -0.3% 0.4% Weighted average annual percentage interest rate 20.4% 20.9% 18.4% 17.8% 19.3% (1) Not applicable to direct lending platform Our pricing strategy is driven by our objectives for new contract purchase quantities and maximizing our risk adjusted yield.
Our programs cover a wide band of the sub-prime credit spectrum and are labeled as follows: First Time Buyer – This program accommodates an applicant who has limited significant past credit history, such as a previous auto loan.
We have offered eight different financing programs, and price each program according to the relative credit risk. Our programs cover a wide band of the sub-prime credit spectrum and are labeled as follows: First Time Buyer – This program accommodates an applicant who has limited significant past credit history, such as a previous auto loan.
Sub-Prime Auto Finance Industry Automobile financing is the second largest consumer finance market in the United States. The automobile finance industry can be considered a continuum where participants choose to provide financing to consumers in various segments of the spectrum of creditworthiness depending on each participant’s business strategy.
The automobile finance industry can be considered a continuum where participants choose to provide financing to consumers in various segments of the spectrum of creditworthiness depending on each participant’s business strategy.
A significant judgment against us or within the industry in connection with any such litigation could have a material adverse effect on our financial condition, results of operations or liquidity. 15 Human Capital We rely on our employees for everything we do.
A significant judgment against us or within the industry in connection with any such litigation could have a material adverse effect on our financial condition, results of operations or liquidity. Human Capital We rely on our employees for everything we do. To make our business work, we seek to supply employees with the tools and knowledge they need to succeed.
Prior to the expiration of the revolving period in January 2024, the revolving period was extended to March 31, 2024. 13 In a securitization and in our warehouse credit facilities, we are required to make certain representations and warranties, which are generally similar to the representations and warranties made by dealers in connection with our purchase of the automobile contracts.
In a securitization and in our warehouse credit facilities, we are required to make certain representations and warranties, which are generally similar to the representations and warranties made by dealers in connection with our purchase of the automobile contracts.
However, in May 2021 we began purchasing some contracts for immediate sale to a third-party to whom we refer applications that do not meet our lending criteria. We service all such contracts on behalf of the third-party. For contracts we originate for our own portfolio, we generally finance them on a long-term basis through securitizations.
We generally solicit applications with the intent of originating contracts to hold as investments in our own portfolio. However, in May 2021 we began purchasing some contracts for immediate sale to a third-party to whom we refer applications that do not meet our lending criteria. We service all such contracts on behalf of the third-party.
As of December 31, 2023, we had 84 sales representatives, and in that month, we received applications from 7,865 dealers in 47 states.
As of December 31, 2024, we had 122 sales representatives, and in that month, we received applications from 8,600 dealers in 47 states.
Additional information about our extensions is provided in the tables below: For the Year Ended December 31, 2023 December 31, 2022 December 31, 2021 Average number of extensions granted per month 6,926 4,689 3,918 Average number of outstanding accounts 176,438 162,264 157,076 Average monthly extensions as % of average outstandings 3.9% 2.9% 2.5% 11 December 31, 2023 December 31, 2022 December 31, 2021 Number of Contracts Amount Number of Contracts Amount Number of Contracts Amount (Dollars in thousands) Contracts with one extension 36,287 $ 649,551 28,565 $ 479,114 24,337 $ 335,864 Contracts with two extensions 19,335 326,552 13,730 180,547 15,861 200,705 Contracts with three extensions 10,109 133,207 9,837 108,986 11,755 136,970 Contracts with four extensions 6,784 67,735 7,938 76,220 9,272 95,182 Contracts with five extensions 5,197 42,734 5,425 45,519 6,531 59,651 Contracts with six extensions 3,118 20,576 3,269 21,806 4,536 35,803 80,830 $ 1,240,355 68,764 $ 912,192 72,292 $ 864,175 Gross servicing portfolio (Excludes Third Party Portfolio) 179,198 $ 2,970,066 170,658 $ 2,795,383 154,151 $ 2,209,430 Non-Accrual Receivables It is not uncommon for our obligors to fall behind in their payments.
Additional information about our extensions is provided in the tables below: For the Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Average number of extensions granted per month 7,540 6,926 4,689 Average number of outstanding accounts 189,460 176,438 162,264 Average monthly extensions as % of average outstandings 4.0% 3.9% 2.9% 11 December 31, 2024 December 31, 2023 December 31, 2022 Number of Contracts Amount Number of Contracts Amount Number of Contracts Amount (Dollars in thousands) Contracts with one extension 37,106 $ 654,067 36,287 $ 649,551 28,565 $ 479,114 Contracts with two extensions 22,452 382,301 19,335 326,552 13,730 180,547 Contracts with three extensions 13,300 214,194 10,109 133,207 9,837 108,986 Contracts with four extensions 7,462 99,071 6,784 67,735 7,938 76,220 Contracts with five extensions 4,645 43,264 5,197 42,734 5,425 45,519 Contracts with six extensions 3,420 22,988 3,118 20,576 3,269 21,806 88,385 $ 1,415,885 80,830 $ 1,240,355 68,764 $ 912,192 Gross servicing portfolio (Excludes Third Party Portfolio) 201,441 $ 3,490,960 179,198 $ 2,970,066 170,658 $ 2,795,383 Non-Accrual Receivables It is not uncommon for our obligors to fall behind in their payments.
Outstanding Managed Portfolio as of December 31, 2023 December 31, 2022 Amount Percent (1) Amount Percent (1) ($ in millions) California $ 274.7 8.6% $ 303.8 10.1% Texas 237.6 7.4% 220.4 7.3% Ohio 232.7 7.3% 243.0 8.1% Illinois 173.3 5.4% 135.2 4.5% Florida 160.2 5.0% 148.0 4.9% Pennsylvania 152.8 4.8% 134.1 4.5% All others 1,963.3 61.5% 1,816.8 60.5% Total $ 3,194.6 100.0% $ 3,001.3 100.0% (1) Percentages may not total to 100.0% due to rounding.
Outstanding Managed Portfolio as of December 31, 2024 December 31, 2023 Amount Percent (1) Amount Percent (1) ($ in millions) California $ 275.2 7.5% $ 274.7 8.6% Texas 287.3 7.8% 237.6 7.4% Ohio 265.5 7.2% 232.7 7.3% Illinois 204.3 5.6% 173.3 5.4% Florida 185.0 5.0% 160.2 5.0% Pennsylvania 168.3 4.6% 152.8 4.8% All others 2,280.1 62.2% 1,963.3 61.5% Total $ 3,665.7 100.0% $ 3,194.6 100.0% (1) Percentages may not total to 100.0% due to rounding.
Contracts Purchased During the Year Ended (1) December 31, 2023 December 31, 2022 (dollars in thousands) Program Amount Financed Percent (1) Amount Financed Percent (1) Meta $ 45,319 3.3% $ 57,145 3.1% Preferred 175,122 12.9% 219,872 11.9% Super Alpha 265,385 19.5% 394,743 21.3% Alpha Plus 179,526 13.2% 193,728 10.4% Alpha 383,512 28.2% 463,466 25.0% Standard 103,499 7.6% 196,738 10.6% Mercury / Delta 52,250 3.8% 74,865 4.0% First Time Buyer 52,313 3.9% 61,742 3.3% Third Parties 100,826 7.4% 192,086 10.4% $ 1,357,752 100.0% $ 1,854,385 100.0% (1) Percentages may not total to 100.0% due to rounding. 5 We attempt to control misrepresentation regarding the customer’s credit worthiness by carefully screening the automobile contracts we originate, by establishing and maintaining professional business relationships with dealers, and by including certain representations and warranties by the dealer in the dealer agreement.
Contracts Purchased During the Year Ended (1) December 31, 2024 December 31, 2023 (dollars in thousands) Program Amount Financed Percent (1) Amount Financed Percent (1) Meta $ 55,241 3.3% $ 45,319 3.3% Preferred 278,044 16.5% 175,122 12.9% Super Alpha 338,156 20.1% 265,385 19.5% Alpha Plus 372,345 22.1% 179,526 13.2% Alpha 424,433 25.2% 383,512 28.2% Standard 116,159 6.9% 103,499 7.6% Mercury / Delta 27,554 1.6% 52,250 3.8% First Time Buyer 37,317 2.2% 52,313 3.9% Third Parties 32,692 1.9% 100,826 7.4% $ 1,681,941 100.0% $ 1,357,752 100.0% (1) Percentages may not total to 100.0% due to rounding. 5 We attempt to control misrepresentation regarding the customer’s credit worthiness by carefully screening the automobile contracts we originate, by establishing and maintaining professional business relationships with dealers, and by including certain representations and warranties by the dealer in the dealer agreement.
Broken out by function, our human capital was allocated thus: 15 were senior management personnel; 529 were servicing personnel; 185 were automobile contract origination personnel; 105 were sales personnel (67 of whom were sales representatives); 56 were various administrative personnel including human resources, legal, accounting and systems.
Broken out by function, our human capital was allocated thus: 14 were senior management personnel; 552 were servicing personnel; 195 were automobile contract origination personnel; 122 were sales personnel; 50 were various administrative personnel including human resources, legal, accounting and systems.
Workforce Allocation and Diversity We had 890 employees as of December 31, 2023. Our employee population was 67% female, and 71% self-identified as ethnically diverse (defined as all EEOC classifications other than white).
Our employee population was 67% female, and 71% self-identified as ethnically diverse (defined as all EEOC classifications other than white).
Contracts Purchased During the Year Ended December 31, 2023 December 31, 2022 Number Percent (1) Number Percent (1) Texas 4,620 7.1% 6,415 7.8% Illinois 4,482 6.9% 4,648 5.7% Ohio 4,015 6.2% 6,247 7.6% California 3,911 6.0% 6,707 8.2% Florida 3,489 5.4% 4,189 5.1% Pennsylvania 3,274 5.0% 3,767 4.6% Other States 41,346 63.5% 49,962 61.0% Total 65,137 100.0% 81,935 100.0% (1) Percentages may not total to 100.0% due to rounding. 3 The following table sets forth the geographic concentrations of our outstanding managed portfolio as of December 31, 2023 and 2022.
Contracts Purchased During the Year Ended December 31, 2024 December 31, 2023 Number Percent (1) Number Percent (1) Texas 5,985 7.8% 4,620 7.1% Ohio 5,643 7.3% 4,015 6.2% California 4,583 6.0% 3,911 6.0% Illinois 4,399 5.7% 4,482 6.9% Florida 4,148 5.4% 3,489 5.4% Georgia 3,432 4.5% 2,598 4.0% Other States 48,819 63.4% 42,022 64.5% Total 77,009 100.0% 65,137 100.0% (1) Percentages may not total to 100.0% due to rounding. 3 The following table sets forth the geographic concentrations of our outstanding managed portfolio as of December 31, 2024 and 2023.
If the payment is not made, or if the payment is made, but the account remains delinquent, the account is returned to a collector’s queue for subsequent contacts.
If the payment is made by the promise date and the account is no longer delinquent, the account is routed out of the collection system. If the payment is not made, or if the payment is made, but the account remains delinquent, the account is returned to a collector’s queue for subsequent contacts.
However, we intend to continue servicing our existing direct loans. For the year ended December 31, 2023 automobile contracts originated under the direct lending platform represented 2.8% of our total acquisitions and represented 2.7% of our outstanding managed portfolio as of December 31, 2023.
However, we intend to continue servicing our existing direct loans. As of December 31, 2024, automobile contracts under the direct lending platform represented 1.6% of our outstanding managed portfolio. For the year ended December 31, 2024 approximately 91% of the automobile contracts originated under our programs consisted of financing for used cars and 9% consisted of financing for new cars.
Securitizations are transactions in which we sell a specified pool of automobile contracts to a special purpose subsidiary of ours. The subsidiary in turn issues (or contributes to a trust that issues) asset-backed securities, which are purchased by institutional investors. Since 1994, we have completed 99 term securitizations of approximately $19.1 billion in automobile contracts.
For contracts we originate for our own portfolio, we generally finance them on a long-term basis through securitizations. Securitizations are transactions in which we sell a specified pool of automobile contracts to a special purpose subsidiary of ours. The subsidiary in turn issues (or contributes to a trust that issues) asset-backed securities, which are purchased by institutional investors.
The collector attempts to get the customer to make an electronic payment over the phone or a promise for the payment for a time generally not to exceed one week from the date of the call.
The collector attempts to get the customer to make a payment or a promise for the payment for a time generally not to exceed one week from the date of the call. If the customer makes such a promise, the account is routed to a promise queue and is not contacted until the outcome of the promise is known.
Broad economic factors such as pandemic, recession and significant changes in unemployment levels influence the credit performance of our portfolio, as does the weighted average age of the receivables at any given time. The tables below document the delinquency, repossession, and net credit loss experience of all such automobile contracts that we own as of the respective dates shown.
Broad economic factors such as recessions and significant changes in unemployment levels influence the credit performance of our portfolio, as does the weighted average age of the receivables at any given time.
To make our business work, we seek to supply employees with the tools and knowledge they need to succeed. In addition to new hire training, we provide mentor programs and management workshops. We offer an education costs assistance program to help with college tuition and costs incurred to obtain job related certifications and licenses.
In addition to new hire training, we provide mentor programs and management workshops. We offer an education costs assistance program to help with college tuition and costs incurred to obtain job related certifications and licenses. 15 Workforce Allocation and Diversity We had 933 employees as of December 31, 2024.
Our pricing strategy is driven by our objectives for new contract purchase quantities and maximizing our risk adjusted yield. We believe that levels of acquisition fees are determined primarily by competition in the marketplace, which has been robust over the periods presented, and by our pricing strategy.
We believe that levels of acquisition fees are determined primarily by competition in the marketplace, which has been robust over the periods presented, and by our pricing strategy. We make changes to our pricing algorithm based on our volume goals, our own costs for borrowing and periodic recalibration of our risk-based scoring models.
The table below summarizes the status, as of December 31, 2023, for accounts that received extensions from 2012 through 2022: Period of Extension # of Extensions Granted Active or Paid Off at December 31, 2023 % Active or Paid Off at December 31, 2023 Charged Off > 6 Months After Extension % Charged Off > 6 Months After Extension Charged Off % Charged Off Avg Months to Charge Off Post Extension 2012 18,783 11,320 60.3% 6,667 35.5% 796 4.2% 18 2013 23,398 11,143 47.6% 11,277 48.2% 976 4.2% 23 2014 25,773 10,475 40.6% 14,477 56.2% 826 3.2% 25 2015 53,319 22,279 41.8% 30,014 56.3% 1,082 2.0% 26 2016 80,897 36,449 45.1% 42,740 52.8% 1,933 2.4% 27 2017 133,847 59,643 44.6% 67,278 50.3% 6,926 5.2% 23 2018 121,531 64,608 53.2% 51,961 42.8% 6,007 4.9% 21 2019 71,548 49,448 69.1% 21,173 29.6% 1,942 2.7% 21 2020 83,170 62,685 75.4% 20,666 24.8% 2,099 2.5% 19 2021 47,010 38,072 81.0% 9,560 20.3% 1,236 2.5% 15 2022 56,142 49,176 87.6% 8,312 14.8% 1,954 3.5% 11 We view these results as a confirmation of the effectiveness of our extension program.
The table below summarizes the status, as of December 31, 2024, for accounts that received extensions from 2013 through 2023: Period of Extension # of Extensions Granted Active or Paid Off at December 31, 2024 % Active or Paid Off at December 31, 2024 Charged Off > 6 Months After Extension % Charged Off > 6 Months After Extension Charged Off % Charged Off Avg Months to Charge Off Post Extension 2013 23,398 11,131 47.6% 11,282 48.2% 985 4.2% 23 2014 25,773 10,423 40.4% 14,485 56.2% 865 3.4% 25 2015 53,319 21,965 41.2% 30,051 56.4% 1,303 2.4% 26 2016 80,897 35,108 43.4% 42,954 53.1% 2,835 3.5% 26 2017 133,847 55,504 41.5% 68,124 50.9% 10,219 7.6% 23 2018 121,531 57,265 47.1% 53,268 43.8% 10,998 9.0% 20 2019 71,548 42,621 59.6% 22,507 31.5% 6,420 9.0% 19 2020 83,170 56,198 67.6% 23,305 28.0% 3,667 4.4% 21 2021 47,010 33,486 71.2% 12,288 26.1% 1,236 2.6% 19 2022 56,142 39,610 70.6% 14,578 26.0% 1,954 3.5% 15 2023 83,113 65,309 78.6% 14,545 17.5% 3,259 3.9% 11 We view these results as a confirmation of the effectiveness of our extension program.
We depend upon the availability of short-term warehouse credit facilities as interim financing for our contract purchases prior to the time we pool those contracts for a securitization. As of December 31, 2023, we had two such short-term warehouse facilities, each with a maximum borrowing amount of $200 million.
Since 1994, we have completed 103 term securitizations of approximately $20.6 billion in automobile contracts. We depend upon the availability of short-term warehouse credit facilities as interim financing for our contract purchases prior to the time we pool those contracts for a securitization.
In addition, the capacity was doubled from $100 million to $200 million at the July 2022 renewal. In November 2015, we entered into another $100 million facility. This facility was most recently renewed in February 2022, extending the revolving period to January 2024, followed by an amortization period to January 2026.
This facility was most recently renewed in March 2024, extending the revolving period to March 2026, followed by an amortization period to March 2028.
Removed
For the year ended December 31, 2023 approximately 94% of the automobile contracts originated under our programs consisted of financing for used cars and 6% consisted of financing for new cars. We generally solicit applications with the intent of originating contracts to hold as investments in our own portfolio.
Added
As of December 31, 2024, we had two such short-term warehouse facilities with a total maximum borrowing capacity of $535 million. Sub-Prime Auto Finance Industry Automobile financing is the second largest consumer finance market in the United States.
Removed
We make changes to our pricing algorithm based on our volume goals, our own costs for borrowing and periodic recalibration of our risk-based scoring models. We have offered eight different financing programs, and price each program according to the relative credit risk.
Added
Contracts originated since January 2018 are accounted for at fair value and the economic impact of late payments is incorporated into the estimated net yield on those contracts.
Removed
If the customer makes such a promise, the account is routed to a promise queue and is not contacted until the outcome of the promise is known. If the payment is made by the promise date and the account is no longer delinquent, the account is routed out of the collection system.
Added
As of December 31, 2024, the notes had a principal balance of $50.0 million. On March 31, 2024, we completed a new residual interest financing of our residual interests from previously issued securitizations in the amount of $50.0 million.
Removed
As a result, for contracts originated prior to January 2018 that are not accounted for under the fair value method, we do not recognize any interest income for contracts that are greater than 90 days past due.
Added
In this residual interest financing transaction, qualified institutional buyer purchased $50.0 million of asset-backed notes secured by an 80% interest in a CPS affiliate that owns the residual interests in five CPS securitizations issued from January 2022 through January 2023.
Removed
In June 2022, we doubled the capacity for this facility from $100 million to $200 million.
Added
In addition, the capacity was increased from $200 million to $335 million in December 2024. 13 In November 2015, we entered into another $100 million facility. In June 2022, we increased the capacity of our credit agreement with Ares Agent Services, L.P. from $100 million to $200 million.
Removed
We continue to assess the Dodd-Frank Act’s probable effect on our business, financial condition and results of operations, and to monitor developments involving the entities charged with promulgating regulations. However, the ultimate effect of the Dodd-Frank Act on the financial services industry in general, and on us in particular, is uncertain at this time.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

37 edited+4 added−11 removed128 unchanged
Biggest changeThese restrictions may limit our ability to obtain additional sources of capital, which may limit our ability to generate earnings. In addition, the failure to comply with any of the covenants of one or more of our debt agreements could cause a default under other debt agreements that may be outstanding from time to time.
Biggest changeIn addition, the failure to comply with any of the covenants of one or more of our debt agreements could cause a default under other debt agreements that may be outstanding from time to time. A default, if not waived, could result in acceleration of the related indebtedness, in which case such debt would become immediately due and payable.
A successful penetration of the security of our systems could cause serious negative consequences, including disruption of our operations, misappropriation of confidential information, or damage to our computers or systems, and could result in violations of applicable privacy and other laws, financial loss to us or to our customers, customer dissatisfaction, significant litigation exposure and harm to our reputation, any or all of which could have a material adverse effect on us.
A successful penetration of the security of our systems could cause serious negative consequences, including disruption of our operations, misappropriation of confidential information, or damage to our computers or systems, and could result in violations of applicable privacy and other laws, financial loss to us or to our customers, customer dissatisfaction, significant litigation and regulatory exposure and harm to our reputation, any or all of which could have a material adverse effect on us.
If interest rates in general should continue to rise, our expenses would likewise continue rise, which could have a material adverse effect on our financial position, liquidity, results of operation and our ability to enter into future financing transactions. 21 If We Are Unable to Compete Successfully with our Competitors, Our Results of Operations May Be Impaired.
If interest rates in general should rise, our expenses would likewise rise, which could have a material adverse effect on our financial position, liquidity, results of operation and our ability to enter into future financing transactions. 21 If We Are Unable to Compete Successfully with our Competitors, Our Results of Operations May Be Impaired.
See “ Cautionary Note Regarding Forward-Looking Statements .” 16 Risks Related to Our Business We Require a Substantial Amount of Cash to Service Our Substantial Debt. To service our existing substantial indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors, including our successful financial and operating performance.
See "Cautionary Note Regarding Forward-Looking Statements." 16 Risks Related to Our Business We Require a Substantial Amount of Cash to Service Our Substantial Debt. To service our existing substantial indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors, including our successful financial and operating performance.
We Do Not Intend to Pay Dividends on Our Common Stock. We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. 29 Item 1B. Unresolved Staff Comments Not applicable.
We Do Not Intend to Pay Dividends on Our Common Stock. We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. Item 1B. Unresolved Staff Comments Not applicable.
We sometimes refer to these future cash flows as “excess spread cash flows.” Under the financial structures we have used to date in our securitizations and warehouse credit facilities, excess spread cash flows that would otherwise be paid to the holder of the residual interest are first used to increase overcollateralization or are retained in a spread account within the securitization trusts or the warehouse facility to provide liquidity and credit enhancement for the related securities.
We sometimes refer to these future cash flows as "excess spread cash flows." Under the financial structures we have used to date in our securitizations and warehouse credit facilities, excess spread cash flows that would otherwise be paid to the holder of the residual interest are first used to increase overcollateralization or are retained in a spread account within the securitization trusts or the warehouse facility to provide liquidity and credit enhancement for the related securities.
Historically, our primary sources of day-to-day liquidity have been our warehouse credit facilities, in which we sell and contribute automobile contracts, as often as twice a week, to special-purpose subsidiaries, where they are “warehoused” until they are financed on a long-term basis through the issuance and sale of asset-backed notes.
Historically, our primary sources of day-to-day liquidity have been our warehouse credit facilities, in which we sell and contribute automobile contracts, as often as twice a week, to special-purpose subsidiaries, where they are "warehoused" until they are financed on a long-term basis through the issuance and sale of asset-backed notes.
As a result, an increase in prevailing interest rates could cause us to receive less excess spread cash flows on automobile contracts, and thus could adversely affect our earnings and cash flows. See “ Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk.” Risks Related to Our Common Stock Our Common Stock Is Thinly-Traded.
As a result, an increase in prevailing interest rates could cause us to receive less excess spread cash flows on automobile contracts, and thus could adversely affect our earnings and cash flows. See “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk.” Risks Related to Our Common Stock Our Common Stock Is Thinly-Traded.
In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets in which our securitizations are executed. Subsequently we successfully completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through January 2024.
In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets in which our securitizations are executed. Subsequently we successfully completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through January 2025.
Similar periods of losses began in the quarter ended March 31, 1999 through the quarter ended December 31, 2000 and also from the quarter ended September 30, 2003 through the quarter ended March 31, 2005. We expect to earn quarterly profits during 2024; however, there can be no assurance as to that expectation.
Similar periods of losses began in the quarter ended March 31, 1999 through the quarter ended December 31, 2000 and also from the quarter ended September 30, 2003 through the quarter ended March 31, 2005. We expect to earn quarterly profits during 2025; however, there can be no assurance as to that expectation.
We depend upon our ability to obtain permanent financing for pools of automobile contracts by conducting term securitization transactions. By “permanent financing” we mean financing that extends to cover the full term during which the underlying automobile contracts are outstanding and requires repayment as the underlying automobile contracts are repaid or charged off.
We depend upon our ability to obtain permanent financing for pools of automobile contracts by conducting term securitization transactions. By "permanent financing" we mean financing that extends to cover the full term during which the underlying automobile contracts are outstanding and requires repayment as the underlying automobile contracts are repaid or charged off.
In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets in which our securitizations are executed. Subsequently we successfully completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through January 2024.
In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets in which our securitizations are executed. Subsequently we successfully completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through January 2025.
During the years ended December 31, 2023 and 2022, no single dealer accounted for as much as 2% of the automobile contracts we purchased. The agreements we have with dealers to purchase automobile contracts do not require dealers to submit a minimum number of automobile contracts for purchase.
During the years ended December 31, 2024 and 2023, no single dealer accounted for as much as 2% of the automobile contracts we purchased. The agreements we have with dealers to purchase automobile contracts do not require dealers to submit a minimum number of automobile contracts for purchase.
We identify important factors that could cause actual results to differ, generally in the “Risk Factors” section of this report, and also under the caption “Cautionary Note Regarding Forward-Looking Statements.” One reason for our expectation is that we have had positive net income in each of the twelve fiscal years ended December 31, 2023, although not in every quarter within that period.
We identify important factors that could cause actual results to differ, generally in the “Risk Factors” section of this report, and also under the caption “Cautionary Note Regarding Forward-Looking Statements.” One reason for our expectation is that we have had positive net income in each of the thirteen fiscal years ended December 31, 2024, although not in every quarter within that period.
These risks may increase in the future as we continue to increase our mobile-payment and other internet-based product offerings and expands our use of web or cloud-based products and applications.
These risks may increase in the future as we continue to increase our mobile-payment and other internet-based product offerings and expand our use of web or cloud-based products and applications.
Additionally, higher gasoline prices, declining stock market values, unstable real estate values, increasing unemployment levels, general availability of consumer credit, changes in vehicle ownership trends and other factors that impact consumer confidence or disposable income could increase loss frequency and decrease demand for automobiles as well as weaken collateral values on certain types of automobiles.
Additionally, higher gasoline prices, the introductions of trade tariffs, declining stock market values, unstable real estate values, increasing unemployment levels, general availability of consumer credit, changes in vehicle ownership trends and other factors that impact consumer confidence or disposable income could increase loss frequency and decrease demand for automobiles as well as weaken collateral values on certain types of automobiles.
Our profitability is largely determined by the difference, or “spread,” between the effective interest rate we receive on the automobile contracts that we acquire and the interest rates payable under warehouse credit facilities and on the asset-backed securities issued in our securitizations.
Our profitability is largely determined by the difference, or "spread," between the effective interest rate we receive on the automobile contracts that we acquire and the interest rates payable under warehouse credit facilities and on the asset-backed securities issued in our securitizations.
These restrictions may also significantly limit or prohibit us from engaging in certain transactions, including the following: · incurring or guaranteeing additional indebtedness; · making capital expenditures in excess of agreed upon amounts; · paying dividends or other distributions to our shareholders or redeeming, repurchasing or retiring our capital stock or subordinated obligations; · making investments; · creating or permitting liens on our assets or the assets of our subsidiaries; · issuing or selling capital stock of our subsidiaries; · transferring or selling our assets; · engaging in mergers or consolidations; · permitting a change of control of our company; · liquidating, winding up or dissolving our company; · changing our name or the nature of our business, or the names or nature of the business of our subsidiaries; and · engaging in transactions with our affiliates outside the normal course of business.
These restrictions may also significantly limit or prohibit us from engaging in certain transactions, including the following: · incurring or guaranteeing additional indebtedness; · making capital expenditures in excess of agreed upon amounts; · paying dividends or other distributions to our shareholders or redeeming, repurchasing or retiring our capital stock or subordinated obligations; · making investments; · creating or permitting liens on our assets or the assets of our subsidiaries; · issuing or selling capital stock of our subsidiaries; · transferring or selling our assets; · engaging in mergers or consolidations; · permitting a change of control of our company; · liquidating, winding up or dissolving our company; · changing our name or the nature of our business, or the names or nature of the business of our subsidiaries; and · engaging in transactions with our affiliates outside the normal course of business. 26 These restrictions may limit our ability to obtain additional sources of capital, which may limit our ability to generate earnings.
The credit spread between the interest rates payable on our securitization trust debt and the rates payable on risk-free investments has varied. The Federal Reserve increased interest rates multiple times in 2022 and 2023. As a result, we have experienced increased interest expense in 2023.
The credit spread between the interest rates payable on our securitization trust debt and the rates payable on risk-free investments has varied. The Federal Reserve increased interest rates multiple times in 2022 and 2023. As a result, we experienced increased interest expense in 2023. In 2024, the Federal Reserve lowered short term interest rates.
Finally, and depending on the extent to which a pandemic or other public health emergency adversely affects the United States economy, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related to our business or operations, the ability or willingness of our customers to make timely payments, and risks of geographic concentrations. 28 Our Results of Operations May Be Impaired as a Result of Natural Disasters.
Depending on the extent to which a pandemic or other public health emergency adversely affects the United States economy, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related to our business or operations, the ability or willingness of our customers to make timely payments, and risks of geographic concentrations.
Because there historically has been low trading volume in our common stock, there can be no assurance that our stock price will not decline as additional shares are sold in the public market. As of December 31, 2023, our directors and executive officers collectively owned 13.2 million shares of our common stock, or approximately 62%.
Because there historically has been low trading volume in our common stock, there can be no assurance that our stock price will not decline as additional shares are sold in the public market. As of December 31, 2024, our directors and executive officers collectively owned 13.0 million shares of our common stock, or approximately 61% of total shares outstanding.
Our systems are also subject to break-ins, sabotage and intentional acts of vandalism by internal employees and contractors as well as third parties. Despite any precautions we may take, such problems could result in interruptions in our services, which could harm our reputation and financial condition.
Our systems are also subject to break-ins, sabotage and intentional acts of vandalism by internal employees and contractors as well as third parties. Our third-party service providers face similar threats. Despite any precautions we may take, such problems could result in interruptions in our services, litigation, and regulatory exposure, which could harm our reputation and financial condition.
See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Liquidity”.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Liquidity”.
Our Substantial Indebtedness Could Adversely Affect Our Financial Health and Prevent Us From Fulfilling Our Obligations Under Our Existing Indebtedness We currently have and will continue to have a substantial amount of outstanding indebtedness. At December 31, 2023, we had approximately $2,566.5 million of debt outstanding.
Our Substantial Indebtedness Could Adversely Affect Our Financial Health and Prevent Us From Fulfilling Our Obligations Under Our Existing Indebtedness We currently have and will continue to have a substantial amount of outstanding indebtedness. At December 31, 2024, we had approximately $3,131.0 million of debt outstanding.
Our automobile contracts are geographically concentrated in the states of California and Texas. Such states may be particularly susceptible to natural disasters: earthquake in the case of California, and hurricanes and flooding in Texas.
Our Results of Operations May Be Impaired as a Result of Natural Disasters. Our automobile contracts are geographically concentrated in the states of California, Florida, and Texas. Such states may be particularly susceptible to natural disasters: earthquake in the case of California, and hurricanes and flooding in Florida and Texas.
We are generally unable to determine whether or to what extent economic or social factors will affect the performance of our portfolio of automobile contracts, but caution that a recession or depression in local, regional or national economies would be expected to increase delinquencies and losses, which would adversely affect our financial condition and results of operations.
We are generally unable to determine whether or to what extent economic or social factors will affect the performance of our portfolio of automobile contracts, but caution that a recession or depression in local, regional or national economies would be expected to increase delinquencies and losses, which would adversely affect our financial condition and results of operations. 28 If an Increase in Interest Rates Results in a Decrease in Our Cash Flows from Excess Spread, Our Results of Operations May Be Impaired.
Upon sale of the notes, funds advanced under one or more warehouse credit facilities are repaid from the proceeds. Our current short-term funding capacity is $400 million, comprising two credit facilities, each with a maximum credit limit of $200 million.
Upon sale of the notes, funds advanced under one or more warehouse credit facilities are repaid from the proceeds. Our current short-term funding capacity is $535 million, comprising two credit facilities.
Although we endeavor to protect the security of our computer systems and the confidentiality of customer information entrusted to us, there can be no assurance that our security measures will provide adequate security. 25 It is possible that we may not be able to anticipate, detect or recognize threats to our systems or to implement effective preventive measures against all security breaches, especially because the techniques used change frequently or are not recognized until launched, and because cyberattacks can originate from a wide variety of sources, including third parties outside the Company such as persons who are associated with external service providers or who are or may be involved in organized crime or linked to terrorist organizations.
It is possible that we may not be able to anticipate, detect or recognize threats to our systems or to implement effective preventive measures against all security breaches, especially because the techniques used change frequently, or are not recognized until launched, because of the rising use of artificial intelligence, and because cyberattacks can originate from a wide variety of sources, including third parties outside the Company such as persons who are associated with external service providers or who are or may be involved in organized crime or linked to terrorist organizations.
Even if any new financing is available, it may not be on terms that are acceptable to us or it may not be sufficient to refinance all of our indebtedness as it becomes due. 26 In addition, the transaction documents for our securitizations restrict our securitization subsidiaries from declaring or making payment to us of (i) any dividend or other distribution on or in respect of any shares of their capital stock, or (ii) any payment on account of the purchase, redemption, retirement or acquisition of any option, warrant or other right to acquire shares of their capital stock unless (in each case) at the time of such declaration or payment (and after giving effect thereto) no amount payable under any transaction document with respect to the related securitization is then due and owing, but unpaid.
In addition, the transaction documents for our securitizations restrict our securitization subsidiaries from declaring or making payment to us of (i) any dividend or other distribution on or in respect of any shares of their capital stock, or (ii) any payment on account of the purchase, redemption, retirement or acquisition of any option, warrant or other right to acquire shares of their capital stock unless (in each case) at the time of such declaration or payment (and after giving effect thereto) no amount payable under any transaction document with respect to the related securitization is then due and owing, but unpaid.
Such debt consisted primarily of $2,265.4 million of securitization trust debt, and also included $234.0 million of warehouse lines of credit, $49.9 million of residual interest financing debt and $17.2 million in subordinated renewable notes.
Such debt consisted primarily of $2,594.4 million of securitization trust debt, and also included $410.9 million of warehouse lines of credit, $99.2 million of residual interest financing debt and $26.5 million in subordinated renewable notes.
We are dependent on our receivables originations, accounting and collection systems to service our portfolio of automobile contracts. Such systems are vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, computer viruses and other events. A significant number of our systems are not redundant, and our disaster recovery planning is not sufficient for every eventuality.
Our systems and the systems of our third-party service providers are vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, cyberattacks, computer viruses and other events. A significant number of our systems are not redundant, and our disaster recovery planning is not sufficient for every eventuality.
A Breach in the Security of Our Systems Could Result in the Disclosure of Confidential Information, Subject us to Liability. We hold in our systems confidential financial and other personal data with respect to our customers, which may be of value to identity thieves and others if revealed.
We hold in our systems confidential financial and other personal data with respect to our customers, which may be of value to identity thieves and others if revealed.
We do not carry business interruption insurance sufficient to compensate us for losses that may result from interruptions in our service as a result of system failures. Such systems problems could materially and adversely affect our results of operations, financial conditions and cash flows.
We do not carry business interruption insurance sufficient to compensate us for losses that may result from interruptions in our service as a result of system failures.
If interest rates on risk-free debt continue to increase, or if our spread above risk-free rates continue to increase, or both, we would expect a continued increase in interest expense.
The pace and direction of additional interest rate changes remain uncertain. If interest rates on risk-free debt increase, or if our spread above risk-free rates increase, or both, we would expect an increase in interest expense.
If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance our indebtedness.
If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance our indebtedness. Even if any new financing is available, it may not be on terms that are acceptable to us or it may not be sufficient to refinance all of our indebtedness as it becomes due.
Risks Related to General Factors If The Economy of All or Certain Regions of the United States Falls into Recession, Our Results of Operations May Be Impaired. Our business is directly related to sales of new and used automobiles, which are sensitive to employment rates, prevailing interest rates and other domestic economic conditions.
Our business is directly related to sales of new and used automobiles, which are sensitive to employment rates, prevailing interest rates and other domestic economic conditions. Delinquencies, repossessions and losses generally increase during economic slowdowns or recessions.
If such estimated value were to be materially different from our recorded value, we might be required to adjust the recorded value of our receivables. A downward readjustment in recorded value would correspondingly reduce our income and book value. 27 We May Have Rescission Liability in Connection With Sales of Our Subordinated Renewable Notes to Certain Purchasers.
If such estimated value were to be materially different from our recorded value, we might be required to adjust the recorded value of our receivables.
Removed
A default, if not waived, could result in acceleration of the related indebtedness, in which case such debt would become immediately due and payable.
Added
We are dependent on our receivables originations, accounting and collection systems to service our portfolio of automobile contracts. We also rely on third-party service providers to facilitate certain aspects of our business.
Removed
We filed a registration statement on Form S-3 with respect to various securities, including our renewable unsecured subordinated notes, on May 28, 2015, and filed amendments to the registration statement on June 26, 2015, and July 27, 2015 (such registration statement, as so amended, the “Former Registration Statement”).
Added
Such systems problems could materially and adversely affect our results of operations, financial conditions and cash flows. 25 A Breach in the Security of Our Systems Could Result in the Disclosure of Confidential Information, Subject us to Liability.
Removed
The Former Registration Statement was declared effective on August 26, 2015 (the “Former Registration Statement Effective Date”). Rule 415(a)(5) under the Securities Act of 1933, as amended (the “Securities Act”), provides that a shelf registration statement such as the Former Registration Statement expires three years after the official effective date.
Added
Although we endeavor to protect the security of our computer systems and the confidentiality of customer information entrusted to us, there can be no assurance that our security measures will provide adequate security.
Removed
The Former Registration Statement expired on August 26, 2018; however, the Company continued to conduct offers and sales and renewals after that date. Additionally, with respect to the Former Registration Statement, the Company failed to file certain prospectus supplements relating to certain sales.
Added
A downward readjustment in recorded value would correspondingly reduce our income and book value. 27 Risks Related to General Factors If The Economy of All or Certain Regions of the United States Falls into Recession, Our Results of Operations May Be Impaired.
Removed
Lastly, offers and sales of Renewable Notes and renewals of outstanding notes were made for amounts beyond the amount of securities covered by the registration statement. These activities may result in certain of these purchasers having a statutory right to rescind their purchases.
Removed
As a result, we could be required to repurchase some or all of such notes at the original sale price plus statutory interest, less the amount of any income received by the purchasers. As of March 1, 2024, there were approximately $3 million of such notes outstanding and sold within the preceding twelve months.
Removed
That figure includes renewals of previously sold notes, but excludes notes that we have repaid, and excludes notes that we sold or renewed pursuant to the registration statement filed in on June 15, 2023, subsequently amended on August 7, 2023 and November 20, 2023, and declared effective on November 30, 2023.
Removed
Our results of operations, financial condition and cash flows could be materially and adversely affected if a substantial number of purchasers of such notes were to successfully assert rescission rights or if we were to be assessed substantial penalties by regulatory authorities.
Removed
If holders of sufficient amounts of such notes were to demand rescission and to prevail in that demand, the adverse effect on our liquidity could be material, which could in turn impair our ability to conduct our business as otherwise planned.
Removed
Delinquencies, repossessions and losses generally increase during economic slowdowns or recessions.
Removed
If an Increase in Interest Rates Results in a Decrease in Our Cash Flows from Excess Spread, Our Results of Operations May Be Impaired.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Senior Vice President of Systems and the Vice President of IT report to the Executive Vice President of Risk, Systems, and IT. 30 The Senior Vice President of Systems and the Vice President of IT work directly with the internal and external IT personnel to implement our information security policies and processes, including those described in the “Risk Management and Strategy” above.
Biggest changeThe Senior Vice President of Systems and the Vice President of IT work directly with the internal and external IT personnel to implement our information security policies and processes, including those described in the “Risk Management and Strategy” above. They are informed about and monitor the prevention, detection, mitigation, and remediation or prevention of cybersecurity incidents through those processes.
They are informed about and monitor the prevention, detection, mitigation, and remediation or prevention of cybersecurity incidents through those processes. They regularly report on the status of these matters to the Executive Vice President of Risk, Systems, and IT. The Board, as a whole, is responsible for risk oversight, including cybersecurity risk.
They regularly report on the status of these matters to the Executive Vice President of Risk, Systems, and IT. The Board, as a whole, is responsible for risk oversight, including cybersecurity risk.
As part of our overall risk management processes, we engage in a multi-departmental strategy to assess and incorporate the above processes and involve other departments as needed, including IT, Systems, Risk Management, and Legal.
In addition, we have a disaster recovery program designed to help us respond to and recover from an interruption of critical IT services. As part of our overall risk management processes, we engage in a multi-departmental strategy to assess and incorporate the above processes and involve other departments as needed, including IT, Systems, Risk Management, and Legal.
We have security awareness training for our employees, including ongoing simulated phishing email campaigns. We utilize firewalls, anti-virus software, encryption on stored data and communication channels, secure web portals for remote access to our systems, password security, and two-factor authentication. We continuously update our software and security patches. We restrict inbound email attachments, certain websites, and cloud-based drives.
We have several safeguards in place to manage material risks from cybersecurity threats. We have security awareness training for our employees, including ongoing simulated phishing email campaigns. We utilize firewalls, anti-virus software, encryption on stored data and communication channels, secure web portals for remote access to our systems, password security, and two-factor authentication.
We use the results of the above-described tools and strategies to assess the sufficiency of the safeguards in place to manage material risks from cybersecurity threats, to enhance such safeguards, or implement new safeguards, as necessary. We have several safeguards in place to manage material risks from cybersecurity threats.
We have an incident reporting portal available to all employees to submit any issues they suspect may pose a risk to our information technology (“IT”) systems and security. 29 We use the results of the above-described tools and strategies to assess the sufficiency of the safeguards in place to manage material risks from cybersecurity threats, to enhance such safeguards, or implement new safeguards, as necessary.
We monitor and restrict information transfers to and from unauthorized IP addresses. We also have physical security safeguards for our locations and data centers. We back up our systems and data regularly. In addition, we have a disaster recovery program designed to help us quickly respond to and recover from an interruption of critical IT services.
We continuously update our software and security patches. We restrict inbound email attachments, certain websites, and cloud-based drives. We monitor and restrict information transfers to and from unauthorized IP addresses. We also have physical security safeguards for our locations and data centers. We back up our systems and data regularly.
This includes the use of intrusion detection systems, log analysis, and real-time monitoring of critical systems. We have an incident reporting portal available to all employees to submit any issues they suspect may pose a risk to our information technology (“IT”) systems and security.
This includes the use of intrusion detection systems, log analysis, and real-time monitoring of critical systems.
Added
The Senior Vice President of Systems and the Vice President of IT report to the Executive Vice President of Risk, Systems, and IT.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur operating headquarters are located in Irvine, California, where we currently lease approximately 69,000 square feet of general office space from an unaffiliated lessor. The annual base rent is approximately $2.5 million through 2024. The remaining three regional servicing centers occupy a total of approximately 65,000 square feet of leased space in Chesapeake, Virginia; Maitland, Florida; and Oak Brook, Illinois.
Biggest changeThe annual base rent is approximately $2.5 million through 2029. 30 The remaining three regional servicing centers occupy a total of approximately 65,000 square feet of leased space in Chesapeake, Virginia; Maitland, Florida; and Oak Brook, Illinois. The termination dates of such leases range from 2025 to 2031. The annual base rent for these facilities total approximately $1.4 million.
Item 2. Properties Our principal executive offices are located in Las Vegas, Nevada, where we currently lease approximately 45,000 square feet of general office space from an unaffiliated lessor. The annual base rent is approximately $1.8 million through 2023.
Item 2. Properties Our principal executive offices are located in Las Vegas, Nevada, where we currently lease approximately 45,000 square feet of general office space from an unaffiliated lessor. The annual base rent is approximately $1.6 million through 2029.
Removed
The termination dates of such leases range from 2025 to 2031. The annual base rent for these facilities total approximately $1.4 million.
Added
Our operating headquarters are located in Irvine, California, where we currently lease approximately 69,000 square feet of general office space from an unaffiliated lessor.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn August 2023, the parties settled by agreement the claims of the plaintiff and a California settlement class for $1.1 million and the settlement remains subject to final court approval. Massachusetts Civil Investigative Demand .
Biggest changeIn August 2023, the parties settled by agreement the claims of the plaintiff and a California settlement class for $1.1 million. The settlement was approved by the court on October 9, 2024. Under the settlement, the Company paid, after September 30, 2024, $1.1 million to the settlement administrator. In General.
The complaint seeks injunctive relief, an award of unpaid wages, liquidated damages, and attorney fees and interest. The plaintiff purports to act on behalf of a class of similarly situated employees and ex-employees. We believe that our compensation practices with respect to our sales representatives are compliant with applicable law.
The complaint sought injunctive relief, an award of unpaid wages, liquidated damages, and attorney fees and interest. The plaintiff purported to act on behalf of a class of similarly situated employees and ex-employees. We believe that our compensation practices with respect to our sales representatives are compliant with applicable law.
However, based on such information as is available to us, we believe that the total of probable incurred losses for legal contingencies as of December 31, 2023 is $3.6 million, and that the range of reasonably possible losses for the legal proceedings and contingencies we face, including those described or identified above, as of December 31, 2023 does not exceed $5.6 million.
However, based on such information as is available to us, we believe that the range of reasonably possible losses for the legal proceedings and contingencies we face, including those described or identified above, as of December 31, 2024 does not exceed $3.2 million.
We record at each measurement date, most recently as of December 31, 2023, our best estimate of probable incurred losses for legal contingencies, including the matters identified above. The amount of losses that may ultimately be incurred cannot be estimated with certainty.
There can be no assurance as to the outcomes of the matters described or referenced above. We record at each measurement date, most recently as of December 31, 2024, our best estimate of probable incurred losses for legal contingencies, including the matters identified above. The amount of losses that may ultimately be incurred cannot be estimated with certainty.
Removed
In April 2022, a motion for certification of a class was filed but has not been ruled upon. It is reasonable to expect that resolution of these claims will be on a class basis. Wage and Hour Claim.
Added
In April 2024 a motion for certification of a class was filed. Prior to the motion being ruled upon, summary judgment was granted in our favor, disposing of the claims against CPS.
Removed
In September 2021, we received a civil investigative demand from the Office of the Attorney General of the Commonwealth of Massachusetts relating to the Company’s communications with and repossession notices sent to Massachusetts customers.
Added
An appeal of the summary judgment ruling was filed on October 25, 2024 and a cross appeal of the denial of the motion to compel arbitration was filed on October 31, 2024. Wage and Hour Claim.
Removed
On December 28, 2023 and without admitting any wrongdoing, the Company entered into an assurance of discontinuance with the Office of the Attorney General of the Commonwealth of Massachusetts, reflecting the parties’ agreements to settle and fully resolve allegations of the Company’s noncompliance with Massachusetts law.
Removed
The Company agreed to make a payment in the total amount of $1.24 million to an independent trust for the purposes of making payments to eligible consumers, paying costs of implementation, and paying the Attorney General’s costs of investigation.
Removed
In addition, the Company agreed to pay $75,000 for the fees and costs of a trustee to oversee the trust. 31 In General. There can be no assurance as to the outcomes of the matters described or referenced above.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeShe joined the Company in June 1991 as an Operations Specialist, and held a series of successively more responsible positions. Previously, Ms. Robinson held an administrative position at Greco & Associates. 32 Laurie A. Straten, 57 , has been Executive Vice President of Servicing since December 2022.
Biggest changeShe joined the Company in June 1991 as an Operations Specialist, and held a series of successively more responsible positions. Previously, Ms. Robinson held an administrative position at Greco & Associates. Michele Baumeister , 58, has been Senior Vice President of Originations since June 2023.
Item 4. Mine Safety Disclosures Not applicable. Information about Our Executive Officers Set forth below are the names, ages, offices held, tenure, and certain biographical information of each of our executive officers as of the filing of this report: Charles E.
Item 4. Mine Safety Disclosures Not applicable. 31 Information about Our Executive Officers Set forth below are the names, ages, offices held, tenure, and certain biographical information of each of our executive officers as of the filing of this report: Charles E.
Charles Gonel , 43, has been Senior Vice President of Servicing since June 2023. Prior to that he was the Vice President of Collections from March 2015 to June 2023. He joined the Company in March 2008 as a Collections Analyst and transferred into the Risk Management Department in 2010 where he held a sequence of increasingly more responsible positions.
Charles Gonel , 44, has been Senior Vice President of Servicing since June 2023. Prior to that he was the Vice President of Collections from March 2015 to June 2023. He joined the Company in March 2008 as a Collections Analyst and transferred into the Risk Management Department in 2010 where he held a sequence of increasingly more responsible positions.
Catrina Ralston , 48, has been Senior Vice President of Human Resources since December 2022. Prior to that, she was Vice President - Human Resources since March 2016. She joined the Company in 1997 as an Operations Clerk and transferred into the Human Resources Department in 2001 where she held a series of successively more responsible positions.
Catrina Ralston , 49, has been Senior Vice President of Human Resources since December 2022. Prior to that, she was Vice President - Human Resources since March 2016. She joined the Company in 1997 as an Operations Clerk and transferred into the Human Resources Department in 2001 where she held a series of successively more responsible positions.
Steve Schween , 61, has been Senior Vice President of Systems since December 2022. Previously, he was Vice President of Systems from February 2014. He joined in the Company in 2000 as a Systems Analyst and took on more responsibility over time. Mr. Schween was previously a Systems Analyst with Jeunique International. 33 PART II
Steve Schween , 62, has been Senior Vice President of Systems since December 2022. Previously, he was Vice President of Systems from February 2014. He joined in the Company in 2000 as a Systems Analyst and took on more responsibility over time. Mr. Schween was previously a Systems Analyst with Jeunique International. 33 PART II
Prior to that she was the Vice President of Legal from January 2020 to June 2023, the Assistant Vice President of Legal/Corporate Counsel from December 2018 to January 2020, and Corporate Counsel from December 2015 to December 2018. Ms. Reynoso is a California barred attorney. Susan Ryan , 52, has been Senior Vice President of Servicing since June 2023.
Prior to that she was the Vice President of Legal from January 2020 to June 2023, the Assistant Vice President of Legal/Corporate Counsel from December 2018 to January 2020, and Corporate Counsel from December 2015 to December 2018. Ms. Reynoso is a California barred attorney. Susan Ryan , 53, has been Senior Vice President of Servicing since June 2023.
Bradley, Jr ., 64, has been our Chief Executive Officer since January 1992, a director since our formation in March 1991, and was elected Chairman of the Board of Directors in July 2001. Prior to that he was our President from March 1991 to December 2022.
Bradley, Jr ., 65, has been our Chief Executive Officer since January 1992, a director since our formation in March 1991, and was elected Chairman of the Board of Directors in July 2001. Prior to that he was our President from March 1991 to December 2022.
April Crisp , 37, has been the Senior Vice President of Compliance and Regulatory Affairs since June 2023. Prior to that, she was the Vice President of Legal from August 2016 to June 2023, and the Assistant Vice President of Legal from November 2013 to August 2016. Ms. Crisp is a California barred attorney.
April Crisp , 38, has been the Senior Vice President of Compliance and Regulatory Affairs since June 2023. Prior to that, she was the Vice President of Legal from August 2016 to June 2023, and the Assistant Vice President of Legal from November 2013 to August 2016. Ms. Crisp is a California barred attorney.
Prior to joining CPS, Ms. Ralston worked as a customer service representative for the City of Virginia Beach Parks & Recreation Department. Lisette Reynoso , 36, has been Senior Vice President and General Counsel since June 2023.
Prior to joining CPS, Ms. Ralston worked as a customer service representative for the City of Virginia Beach Parks & Recreation Department. Lisette Reynoso , 37, has been Senior Vice President and General Counsel since June 2023.
Lavin was previously engaged as an associate at a large law firm and a spin off start up law firm. Danny Bharwani , 56, has been Chief Financial Officer since September 2022 and Executive Vice President – Finance since December 2022.
Lavin was previously engaged as an associate at a large law firm and a spin off start up law firm. Danny Bharwani , 57, has been Chief Financial Officer since September 2022 and Executive Vice President – Finance since December 2022.
Robinson, 61, has been Executive Vice President of Sales and Originations since December 2022. Prior to that she was Senior Vice President of Sales and Originations from June 2020 to December 2022 and Senior Vice President of Originations from April 2007 to June 2020. Prior to that, she held the position of Vice President of Originations since August 1998.
Robinson, 62, has been Executive Vice President of Sales and Originations since December 2022. Prior to that she was Senior Vice President of Sales and Originations from June 2020 to December 2022 and Senior Vice President of Originations from April 2007 to June 2020. Prior to that, she held the position of Vice President of Originations since August 1998.
Christopher Terry, 56, has been Executive Vice President of Risk Management, Systems, and IT since December 2022. Prior to that he was our Senior Vice President of Risk Management, Systems, and IT from October 2018 to December 2022, and Senior Vice President of Risk Management from May 2017 to October 2018.
Christopher Terry, 57, has been Executive Vice President of Risk Management, Systems, and IT since December 2022. Prior to that he was our Senior Vice President of Risk Management, Systems, and IT from October 2018 to December 2022, and Senior Vice President of Risk Management from May 2017 to October 2018.
Prior to joining CPS, he was a Quality Assurance Analyst with AT&T Wireless. John P. Harton , 59, has been Senior Vice President – Business Development since June 2020.
Prior to joining CPS, he was a Quality Assurance Analyst with AT&T Wireless. 32 John P. Harton , 60, has been Senior Vice President – Business Development since June 2020.
Lavin, 51, has been President since December 2022, Chief Operating Officer since February 2019, and our Chief Legal Officer since March 2014.
Lavin, 52, has been President since December 2022, Chief Operating Officer since February 2019, and our Chief Legal Officer since March 2014.
Removed
Prior to that, she was our Senior Vice President of Servicing from August 2013 to December 2022 and Senior Vice President of Asset Recovery from April 2013 to August 2013, and before that she held the position of Vice President of Asset Recovery starting in April 2005.
Removed
She started with the Company in March 1996 as a bankruptcy specialist and took on more responsibility within Asset Recovery over time. Prior to joining CPS she worked for the FDIC and served in the United States Marine Corps. Michele Baumeister , 57, has been Senior Vice President of Originations since June 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities in the Fourth Quarter Period(1) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 2023 $ 39,221 $ 8.95 39,221 $ 1,554,030 November 2023 – – – 1,554,030 December 2023 5,860 9.16 5,860 1,500,334 Total $ 45,081 $ 8.98 45,081 (1) Each monthly period is the calendar month.
Biggest changeIssuer Purchases of Equity Securities in the Fourth Quarter Total Number of Average Total Number of Shares Purchased as Part of Publicly Approximate Dollar Value of Shares that May Yet be Purchased Shares Price Paid Announced Plans or Under the Plans or Period(1) Purchased per Share Programs(2) Programs October 2024 – $ – – $ 6,259,660 November 2024 – – – 6,259,660 December 2024 – – – 6,259,660 Total – $ – – (1) Each monthly period is the calendar month.
(2) Through December 31, 2023, our board of directors had authorized the purchase of up to $123.2 million of our outstanding securities, which program was first announced in our annual report for the year 2002, filed on March 26, 2003.
(2) Through December 31, 2024, our board of directors had authorized the purchase of up to $123.2 million of our outstanding securities, which program was first announced in our annual report for the year 2002, filed on March 26, 2003.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The Company’s Common Stock is traded on the Nasdaq Global Market, under the symbol “ CPSS. ” As of January 1, 2024, there were 28 holders of record of the Company’s Common Stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The Company’s Common Stock is traded on the Nasdaq Global Market, under the symbol " CPSS. " As of January 1, 2025, there were 28 holders of record of the Company’s Common Stock.
All purchases described in the table above were under the plan announced in March 2003, which has no fixed expiration date. As of December 31, 2023, we have purchased $157.7 million of our common stock representing 24,245,802 shares.
All purchases described in the table above were under the plan announced in March 2003, which has no fixed expiration date. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

90 edited+7 added−50 removed76 unchanged
Biggest changeCapitalization Over the period from January 1, 2021 through December 31, 2023 we have managed our capitalization by issuing and refinancing debt as summarized in the following table: Year Ended December 31, 2023 2022 2021 (Dollars in thousands) RESIDUAL INTEREST FINANCING: Beginning balance $ 49,623 $ 53,682 $ 25,426 Issuances – – 50,000 Payments – (4,311 ) (21,265 ) Capitalization of deferred financing costs – – (755 ) Amortization of deferred financing costs 252 252 276 Ending balance $ 49,875 $ 49,623 $ 53,682 SECURITIZATION TRUST DEBT: Beginning balance $ 2,108,744 $ 1,759,972 $ 1,803,673 Issuances 1,235,534 1,411,018 1,110,747 Payments (1,078,432 ) (1,060,052 ) (1,153,114 ) Capitalization of deferred financing costs (7,888 ) (8,681 ) (7,058 ) Amortization of deferred financing costs 7,488 6,487 5,724 Ending balance $ 2,265,446 $ 2,108,744 $ 1,759,972 SUBORDINATED RENEWABLE NOTES: Beginning balance $ 25,263 $ 26,459 $ 21,323 Issuances 586 4,004 12,298 Payments (8,661 ) (5,200 ) (7,162 ) Ending balance $ 17,188 $ 25,263 $ 26,459 52 Residual Interest Financing.
Biggest changeWe plan to adjust our levels of automobile contract purchases and the related capital requirements to match anticipated releases of cash from the trusts and related spread accounts. 47 Capitalization Over the period from January 1, 2022 through December 31, 2024 we have managed our capitalization by issuing and refinancing debt as summarized in the following table: Year Ended December 31, 2024 2023 2022 (Dollars in thousands) RESIDUAL INTEREST FINANCING: Beginning balance $ 49,875 $ 49,623 $ 53,682 Issuances 50,000 – – Payments – – (4,311 ) Capitalization of deferred financing costs (970 ) – – Amortization of deferred financing costs 271 252 252 Ending balance $ 99,176 $ 49,875 $ 49,623 SECURITIZATION TRUST DEBT: Beginning balance $ 2,265,446 $ 2,108,744 $ 1,759,972 Issuances 1,492,017 1,235,534 1,411,018 Payments (1,162,184 ) (1,078,432 ) (1,060,052 ) Capitalization of deferred financing costs (9,316 ) (7,888 ) (8,681 ) Amortization of deferred financing costs 8,421 7,488 6,487 Ending balance $ 2,594,384 $ 2,265,446 $ 2,108,744 SUBORDINATED RENEWABLE NOTES: Beginning balance $ 17,188 $ 25,263 $ 26,459 Issuances 12,589 586 4,004 Payments (3,288 ) (8,661 ) (5,200 ) Ending balance $ 26,489 $ 17,188 $ 25,263 Residual Interest Financing.
In addition to purchasing installment purchase contracts directly from dealers, we also have (i) originated vehicle purchase money loans by lending directly to consumers and have (ii) acquired installment purchase contracts in four merger and acquisition transactions, and (iii) purchased immaterial amounts of vehicle purchase money loans from non-affiliated lenders.
In addition to purchasing installment purchase contracts directly from dealers, we also have (i) originated vehicle purchase money loans by lending directly to consumers, (ii) acquired installment purchase contracts in four merger and acquisition transactions, and (iii) purchased immaterial amounts of vehicle purchase money loans from non-affiliated lenders.
Credit and underwriting functions are performed primarily in our California branch with certain of these functions also performed in our Florida, Nevada, and Virginia branches. We service our automobile contracts from our California, Nevada, Virginia, Florida, and Illinois branches.
Credit and underwriting functions are performed primarily in our California branch with certain of these functions also performed in our Florida and Nevada branches. We service our automobile contracts from our California, Nevada, Virginia, Florida, and Illinois branches.
Subject to any recourse against dealers, we will bear the risk of loss on repossession and resale of vehicles under automobile contracts that we repurchase. In a securitization, the related special purpose subsidiary may be unable to release excess cash to us if the credit performance of the securitized automobile contracts falls short of pre-determined standards.
Subject to any recourse against dealers, we will bear the risk of loss on repossession and resale of vehicles under automobile contracts that we repurchase. 36 In a securitization, the related special purpose subsidiary may be unable to release excess cash to us if the credit performance of the securitized automobile contracts falls short of pre-determined standards.
Critical Accounting Policies We believe that our accounting policies related to (a) Finance Receivables at Fair Value, (b) Allowance for Finance Credit Losses, (c) Term Securitizations, (d) Accrual for Contingent Liabilities and (e) Income Taxes are the most critical to understanding and evaluating our reported financial results. Such policies are described below.
Critical Accounting Estimates We believe that our accounting policies related to (a) Finance Receivables at Fair Value, (b) Allowance for Finance Credit Losses, (c) Term Securitizations, (d) Accrual for Contingent Liabilities and (e) Income Taxes are the most critical to understanding and evaluating our reported financial results. Such policies are described below.
All of our active securitizations are structured as secured financings. When structured to be treated as a secured financing for accounting purposes, the subsidiary is consolidated with us. Accordingly, the sold automobile contracts and the related debt appear as assets and liabilities, respectively, on our consolidated balance sheet.
All of our active securitizations are structured as secured financings. 35 When structured to be treated as a secured financing for accounting purposes, the subsidiary is consolidated with us. Accordingly, the sold automobile contracts and the related debt appear as assets and liabilities, respectively, on our consolidated balance sheet.
Of those, the factor most subject to our control is the rate at which we purchase automobile contracts. We are and may in the future be limited in our ability to purchase automobile contracts due to limits on our capital.
Of those, the factor most subject to our control is the rate at which we purchase automobile contracts. 45 We are and may in the future be limited in our ability to purchase automobile contracts due to limits on our capital.
On each monthly payment date, the 2021-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal payment necessary to maintain a specified minimum collateral ratio. Securitization Trust Debt.
On each monthly payment date, the 2021-1 and 2024-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal payment necessary to maintain a specified minimum collateral ratio. Securitization Trust Debt.
In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers and acquisitions in 2002, 2003, 2004 and 2011. Contract purchase volumes and managed portfolio levels for the five years ended December 31, 2023 are shown in the table below. Managed portfolio comprises both contracts we owned and those we were servicing for third parties.
In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers and acquisitions in 2002, 2003, 2004 and 2011. Contract purchase volumes and managed portfolio levels for the five years ended December 31, 2024 are shown in the table below. Managed portfolio comprises both contracts we owned and those we were servicing for third parties.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition and results of operations for the years ended December 31, 2023 and 2022 should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition and results of operations for the years ended December 31, 2024 and 2023 should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets in which our securitizations are executed. Subsequently, we successfully completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through January 2024.
In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets in which our securitizations are executed. Subsequently, we successfully completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through January 2025.
Such cross-default provisions would allow the respective creditors to declare a default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be accompanied by acceleration of such other indebtedness. As of December 31, 2023, we were in compliance with all such financial covenants.
Such cross-default provisions would allow the respective creditors to declare a default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be accompanied by acceleration of such other indebtedness. As of December 31, 2024, we were in compliance with all such financial covenants.
In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2023 we were in compliance with all such financial covenants.
In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2024 we were in compliance with all such financial covenants.
In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare default if a default occurred under a different facility. As of December 31, 2023, we were in compliance with all such covenants.
In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare default if a default occurred under a different facility. As of December 31, 2024, we were in compliance with all such covenants.
We have recorded a liability as of December 31, 2023, which represents our best estimate of probable incurred losses for legal contingencies at that date. The amount of losses that may ultimately be incurred cannot be estimated with certainty.
We have recorded a liability as of December 31, 2024, which represents our best estimate of probable incurred losses for legal contingencies at that date. The amount of losses that may ultimately be incurred cannot be estimated with certainty.
For the year ended December 31, 2023, our re-evaluation of the fair values of these receivables resulted in a mark up for certain older receivables and a mark down to the fair values of newer receivables.
For the year ended December 31, 2024, our re-evaluation of the fair values of these receivables resulted in a mark up for certain older receivables and a mark down to the fair values of newer receivables.
Our estimates of taxable income are forward-looking statements, and there can be no assurance that our estimates of such taxable income will be correct. Factors discussed under “Risk Factors,” and under the heading “Cautionary Note Regarding Forward-Looking Statements.” may affect whether such projections prove to be correct.
Our estimates of taxable income are forward-looking statements, and there can be no assurance that our estimates of such taxable income will be correct. Factors discussed under "Risk Factors," and under the heading “Cautionary Note Regarding Forward-Looking Statements." may affect whether such projections prove to be correct.
Interest expense is significantly affected by the volume of automobile contracts we purchased during the trailing 12-month period and the use of our warehouse facilities and asset-backed securitizations to finance those contracts. Employee costs and general and administrative expenses are incurred as applications and automobile contracts are received, processed and serviced.
Interest expense is affected by the volume of automobile contracts we purchased during the trailing 12-month period and the use of our warehouse facilities and asset-backed securitizations to finance those contracts and, more significantly, on the interest rates on these facilities. Employee costs and general and administrative expenses are incurred as applications and automobile contracts are received, processed and serviced.
Our recent history of term securitizations is summarized in the table below: Recent Asset-Backed Securitizations $ in thousands Period Number of Term Securitizations Amount of Receivables 2017 4 $ 870,000 2018 4 883,452 2019 4 1,014,124 2020 3 741,867 2021 4 1,145,002 2022 4 1,537,383 2023 4 1,352,114 Generally, prior to a securitization transaction we fund our automobile contract acquisitions primarily with proceeds from warehouse credit facilities.
Our recent history of term securitizations is summarized in the table below: Recent Asset-Backed Securitizations $ in thousands Period Number of Term Securitizations Amount of Receivables 2018 4 883,452 2019 4 1,014,124 2020 3 741,867 2021 4 1,145,002 2022 4 1,537,383 2023 4 1,352,114 2024 4 1,533,854 Generally, prior to a securitization transaction we fund our automobile contract acquisitions primarily with proceeds from warehouse credit facilities.
The loans under the facility accrue interest at a commercial paper rate plus 4.15% per annum, with a minimum rate of 5.15% per annum. On February 2, 2022, we renewed our two-year revolving credit agreement with Ares Agent Services, L.P.
The loans under the facility accrue interest at a commercial paper rate plus 4.50% per annum, with a minimum rate of 7.50% per annum. On February 2, 2022, we renewed our two-year revolving credit agreement with Ares Agent Services, L.P.
Since 1994 we have conducted 99 term securitizations of automobile contracts that we originated under our regular programs. As of December 31, 2023, 18 of those securitizations are active and all are structured as secured financings. We generally conduct our securitizations on a quarterly basis, near the beginning of each calendar quarter, resulting in four securitizations per calendar year.
Since 1994 we have conducted 103 term securitizations of automobile contracts that we originated under our regular programs. As of December 31, 2024, 17 of those securitizations are active and all are structured as secured financings. We generally conduct our securitizations on a quarterly basis, near the beginning of each calendar quarter, resulting in four securitizations per calendar year.
Since 2011, we treated all 49 of our securitizations of automobile contracts as secured financings for financial accounting purposes, and the asset-backed securities issued in such securitizations remain on our consolidated balance sheet as securitization trust debt. We had $2,265.4 million of securitization trust debt outstanding at December 31, 2023. Subordinated Renewable Notes Debt.
Since 2011, we treated all 53 of our securitizations of automobile contracts as secured financings for financial accounting purposes, and the asset-backed securities issued in such securitizations remain on our consolidated balance sheet as securitization trust debt. We had $2,594.4 million of securitization trust debt outstanding at December 31, 2024. Subordinated Renewable Notes Debt.
Net cash provided by operating activities for the years ended December 31, 2023, 2022 and 2021 was $238.0 million, $215.9 million and $198.2 million, respectively. Net cash from operating activities is generally provided by net income from operations adjusted for significant non-cash items such as our provision for credit losses and interest accretion on fair value receivables.
Net cash provided by operating activities for the years ended December 31, 2024, 2023 and 2022 was $233.8 million, $238.0 million and $215.9 million, respectively. Net cash from operating activities is generally provided by net income from operations adjusted for significant non-cash items such as our provision for credit losses and interest accretion on fair value receivables.
Because our initial recorded value is fixed as the price we pay for the receivable, rather than as the contractual principal balance, we do not record acquisition fees as an amortizing asset related to the receivables, nor do we capitalize costs of acquiring the receivables.
Because our initial recorded value is fixed as the price we pay for the receivable, rather than as the contractual principal balance, we do not record acquisition fees as an amortizing asset related to the receivables, nor do we capitalize costs of acquiring the receivables. Rather we recognize the costs of acquisition as expenses in the period incurred.
Renewed notes bear interest at the rate we are offering at that time to other investors with similar note maturities. Based on the terms of the individual notes, interest payments may be required monthly, quarterly, annually or upon maturity. At December 31, 2023 there were $17.2 million of such notes outstanding.
Renewed notes bear interest at the rate we are offering at that time to other investors with similar note maturities. Based on the terms of the individual notes, interest payments may be required monthly, quarterly, annually or upon maturity. At December 31, 2024 there were $26.5 million of such notes outstanding.
The blended interest rates of our recent securitizations are summarized in the table below: Blended Cost of Funds on Recent Asset-Backed Term Securitizations Period Blended Cost of Funds January 2020 3.08% June 2020 4.09% September 2020 2.39% January 2021 1.11% April 2021 1.65% July 2021 1.55% October 2021 2.09% January 2022 2.54% April 2022 4.83% July 2022 6.02% October 2022 8.48% January 2023 6.48% April 2023 7.17% July 2023 7.13% October 2023 7.89% Interest expense on warehouse lines of credit was $19.2 million for the year ended December 31, 2023 compared to $10.3 million in the prior year.
The blended interest rates of our recent securitizations are summarized in the table below: Blended Cost of Funds on Recent Asset-Backed Term Securitizations Period Blended Cost of Funds January 2021 1.11% April 2021 1.65% July 2021 1.55% October 2021 2.09% January 2022 2.54% April 2022 4.83% July 2022 6.02% October 2022 8.48% January 2023 6.48% April 2023 7.17% July 2023 7.13% October 2023 7.89% January 2024 6.51% April 2024 6.69% June 2024 6.56% September 2024 5.52% Interest expense on warehouse lines of credit was $19.3 million for the year ended December 31, 2024 compared to $19.2 million in the prior year.
In January 2024, we completed another securitization with $280.9 million of notes sold. Cash proceeds from this securitization were used to pay down the outstanding balance on our two warehouse credit facilities thus increasing the amounts available for borrowing under these facilities.
In January 2025, we completed another securitization with $442.4 million of notes sold. Cash proceeds from this securitization were used to pay down the outstanding balance on our two warehouse credit facilities thus increasing the amounts available for borrowing under these facilities.
We structure our securitizations to include internal credit enhancement for the benefit the investors (i) in the form of an initial cash deposit to an account ( “ spread account ” ) held by the trust, (ii) in the form of overcollateralization of the senior asset-backed securities, where the principal balance of the senior asset-backed securities issued is less than the principal balance of the automobile contracts, (iii) in the form of subordinated asset-backed securities, or (iv) some combination of such internal credit enhancements.
We may retain or sell subordinated asset-backed securities issued by the trust or by a related entity. 37 We structure our securitizations to include internal credit enhancement for the benefit the investors (i) in the form of an initial cash deposit to an account ( " spread account " ) held by the trust, (ii) in the form of overcollateralization of the senior asset-backed securities, where the principal balance of the senior asset-backed securities issued is less than the principal balance of the automobile contracts, (iii) in the form of subordinated asset-backed securities, or (iv) some combination of such internal credit enhancements.
Cash provided by investing activities primarily results from principal payments and other proceeds received on finance receivables. Net cash provided by financing activities were $84.2 million and $484.2 million in 2023 and 2022, respectively. Net cash used in financing activities for the year ended December 31, 2021 was $50.4 million.
Cash provided by investing activities primarily results from principal payments and other proceeds received on finance receivables. Net cash provided by financing activities were $547.9 million and $84.2 million in 2024 and 2023, respectively. Net cash used in financing activities for the year ended December 31, 2022 was $484.2 million.
Our business is to purchase and service retail automobile contracts originated primarily by franchised automobile dealers and, to a lesser extent, by select independent dealers in the United States in the sale of new and used automobiles, light trucks and passenger vans.
Overview We are a specialty finance company. Our business is to purchase and service retail automobile contracts originated primarily by franchised automobile dealers and, to a lesser extent, by select independent dealers in the United States in the sale of new and used automobiles, light trucks and passenger vans.
Since 1994, we have completed 99 term securitizations of approximately $19.1 billion in contracts. We generally conduct our securitizations on a quarterly basis, near the beginning of each calendar quarter, resulting in four securitizations per calendar year. However, we completed only three securitizations in 2020.
Since 1994, we have completed 103 term securitizations of approximately $20.6 billion in contracts. We generally conduct our securitizations on a quarterly basis, near the beginning of each calendar quarter, resulting in four securitizations per calendar year. However, we completed only three securitizations in 2020.
Contract Purchases and Outstanding Managed Portfolio $ in thousands Year Contracts Purchased in Period Managed Portfolio at Period End 2019 $ 1,002,782 $ 2,416,042 2020 742,584 2,174,972 2021 1,146,321 2,249,069 2022 1,854,385 3,001,308 2023 1,357,752 3,194,623 Our principal executive offices are in Las Vegas, Nevada. Most of our operational and administrative functions take place in Irvine, California.
Contract Purchases and Outstanding Managed Portfolio $ in thousands Year Contracts Purchased in Period Managed Portfolio at Period End 2020 742,584 2,174,972 2021 1,146,321 2,249,069 2022 1,854,385 3,001,308 2023 1,357,752 3,194,623 2024 1,681,941 3,665,725 Our principal executive offices are in Las Vegas, Nevada. Most of our operational and administrative functions take place in Irvine, California.
Net cash used in investing activities for the year ended December 31, 2023, 2022 and 2021 was $359.5 million, $713.9 million and $115.4 million, respectively. Cash used in investing activities generally relates to purchases of automobile contracts. Purchases of finance receivables were $1,251.0 million (includes acquisition fees paid), $1,673.2 million and $1,107.5 million in 2023, 2022 and 2021, respectively.
Net cash used in investing activities for the year ended December 31, 2024, 2023 and 2022 was $769.7 million, $359.5 million and $713.9 million, respectively. Cash used in investing activities generally relates to purchases of automobile contracts. Purchases of finance receivables were $1,653.0 million (includes acquisition fees paid), $1,251.0 million and $1,673.2 million in 2024, 2023 and 2022, respectively.
Results for the years ended December 31, 2023 and 2022 include marks of $12.0 and $15.3 million, respectively, to the carrying value of the portion of the receivables portfolio accounted for at fair value.
Results for the years ended December 31, 2024 and 2023 include marks of $21.0 and $12.0 million, respectively, to the carrying value of the portion of the receivables portfolio accounted for at fair value.
Revenues for the years ended December 31, 2023 and 2022 include fair value marks of $12.0 and $15.3 million, respectively, to the carrying value of the portion of the receivables portfolio accounted for at fair value.
Revenues for the years ended December 31, 2024 and 2023 include fair value marks of $21.0 and $12.0 million, respectively, to the carrying value of the portion of the receivables portfolio accounted for at fair value.
In June 2022, we increased the capacity of our credit agreement with Ares Agent Services, L.P. from $100 million to $200 million. This facility was amended to extend the revolving period to January 2024 followed by an amortization period through January 2028 for any receivables pledged to the facility at the end of the revolving period.
In June 2022, we increased the capacity of our credit agreement with Ares Agent Services, L.P. from $100 million to $200 million. This facility was most recently renewed in March 2024, extending the revolving period to March 2026 followed by an amortization period through March 2028 for any receivables pledged to the facility at the end of the revolving period.
Such debt consisted primarily of $2,265.4 million of securitization trust debt, and also included $234.0 million of warehouse lines of credit, $49.9 million of residual interest financing debt and $17.2 million in subordinated renewable notes. Although we believe we are able to service and repay our debt, there is no assurance that we will be able to do so.
Such debt consisted primarily of $2,594.4 million of securitization trust debt, and also included $410.9 million of warehouse lines of credit, $99.2 million of residual interest financing debt and $26.5 million in subordinated renewable notes. Although we believe we are able to service and repay our debt, there is no assurance that we will be able to do so.
In this report, we refer to all of such contracts and loans as “automobile contracts.” We were incorporated and began our operations in March 1991. From inception through December 31, 2023, we have purchased a total of approximately $21.3 billion of automobile contracts from dealers.
In this report, we refer to all of such contracts and loans as "automobile contracts." We were incorporated and began our operations in March 1991. From inception through December 31, 2024, we have purchased a total of approximately $23.0 billion of automobile contracts from dealers.
The average balance of securitization trust debt increased 15.5% to $2,333.5 million for the year ended December 31, 2023 compared to $2,020.0 million for the year ended December 31, 2022. The annualized average rate on our securitization trust debt was 5.2% for the year ended December 31, 2023 compared to 3.5% in the prior year period.
The average balance of securitization trust debt increased 11.3% to $2,596.6 million for the year ended December 31, 2024 compared to $2,333.5 million for the year ended December 31, 2023. The annualized average rate on our securitization trust debt was 6.2% for the year ended December 31, 2024 compared to 5.2% in the prior year period.
Our current short-term funding capacity is $400 million, comprising two credit facilities. The first credit facility was established in May 2012. This facility was most recently renewed in July 2022, extending the revolving period to July 2024, with an optional amortization period through July 2025.
Our current short-term funding capacity is $535 million, comprising two credit facilities. The first credit facility was established in May 2012. This facility was most recently renewed in July 2024, extending the revolving period to July 2026, with an optional amortization period through July 2027. In addition, the capacity was increased to $335 million in December 2024.
At December 31, 2023 there was $165.6 million outstanding under this facility. Facility Established in November 2015. On November 24, 2015, we entered into an additional $100 million one-year warehouse credit line with affiliates of Credit Suisse Group and Ares Management LP.
In December 2024, we increased the capacity from $225 million to $335 million. At December 31, 2024 there was $269.6 million outstanding under this facility. Facility Established in November 2015. On November 24, 2015, we entered into an additional $100 million one-year warehouse credit line with affiliates of Credit Suisse Group and Ares Management LP.
We issued $1,235.5 million in new securitization trust debt in 2023 compared to $1,411.0 million in 2022 and $1,110.7 million in 2021. Repayments of securitization debt were $1,078.4 million, $1,060.1 million and $1,153.1 million in 2023, 2022 and 2021, respectively.
We issued $1,453.9 million in new securitization trust debt in 2024 compared to $1,235.5 million in 2023 and $1,411.0 million in 2022. Repayments of securitization debt were $1,124.1 million, $1,078.4 million and $1,060.1 million in 2024, 2023 and 2022, respectively.
In addition, the capacity was doubled from $100 million to $200 million at the July 2022 renewal. In November 2015, we entered into another $100 million facility. This facility was most recently renewed in February 2022, extending the revolving period to January 2024, followed by an amortization period to January 2026.
In November 2015, we entered into another $100 million facility. In June 2022, we doubled the capacity for this facility from $100 million to $200 million. This facility was most recently renewed in March 2024, extending the revolving period to March 2026, followed by an amortization period to March 2028.
However, based on such information as is available to us, we believe that the range of reasonably possible losses for the legal proceedings and contingencies described or referenced above, as of December 31, 2023, and in excess of the liability we have recorded, does not exceed $5.6 million.
However, based on such information as is available to us, we believe that the range of reasonably possible losses for the legal proceedings and contingencies described or referenced above, as of December 31, 2024 does not exceed $3.2 million.
Occupancy expenses were $6.4 million in 2023 which is down from $7.5 million in 2022. Depreciation and amortization expenses decreased to $847,000 compared to $1.6 million in the prior year. For the year ended December 31, 2023, we recorded income tax expense of $15.6 million, representing a 26% effective tax rate.
Occupancy expenses were $5.6 million in 2024 which is down from $6.4 million in 2023. Depreciation and amortization expenses increased to $862,000 compared to $847,000 in the prior year. For the year ended December 31, 2024, we recorded income tax expense of $8.2 million, representing a 30% effective tax rate.
The fair value mark up on the older receivables exceeded the mark down to the newer receivables resulting in a net mark up of $12.0 million. Interest income for the year ended December 31, 2023 increased $24.0 million, or 7.9%, to $329.2 million from $305.2 million in the prior year.
The fair value mark up on the older receivables exceeded the mark down to the newer receivables resulting in a net mark up of $21.0 million. Interest income for the year ended December 31, 2024 increased $34.7 million, or 10.6%, to $364.0 million from $329.2 million in the prior year.
The table below shows the average balance and interest yield of our loan portfolio for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (Dollars in thousands) Average Interest Average Interest Balance Interest Yield Balance Interest Yield Interest Earning Assets Loan portfolio $ 2,913,571 $ 329,219 11.3% $ 2,539,110 $ 305,237 12.0% 40 Other income was $10.8 million for the year ended December 31, 2023 compared to $9.2 million for the year ended December 31, 2022.
The table below shows the average balance and interest yield of our loan portfolio for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (Dollars in thousands) Average Interest Average Interest Balance Interest Yield Balance Interest Yield Interest Earning Assets Loan portfolio $ 3,209,988 $ 363,962 11.3% $ 2,913,571 $ 329,219 11.3% 40 Other income was $8.5 million for the year ended December 31, 2024 compared to $10.8 million for the year ended December 31, 2023.
One or more investors purchase the asset-backed securities issued by the trust; the proceeds from the sale of the asset-backed securities are then used to purchase the automobile contracts from us. We may retain or sell subordinated asset-backed securities issued by the trust or by a related entity.
One or more investors purchase the asset-backed securities issued by the trust; the proceeds from the sale of the asset-backed securities are then used to purchase the automobile contracts from us.
As of December 31, 2023, we had unrestricted cash of $6.2 million and $166.0 million aggregate available borrowings under our two warehouse credit facilities (assuming the availability of sufficient eligible collateral). As of December 31, 2023, we had approximately $21.9 million of such eligible collateral. During 2023, we completed four securitizations aggregating $1,235.5 million of notes sold.
As of December 31, 2024, we had unrestricted cash of $11.7 million and $124.1 million aggregate available borrowings under our two warehouse credit facilities (assuming the availability of sufficient eligible collateral). As of December 31, 2024, we had approximately $23.0 million of such eligible collateral. During 2024, we completed four securitizations aggregating $1,453.9 million of notes sold.
As a result, the residual interests described above historically have been a significant asset of ours. 38 In all of our term securitizations and warehouse credit facilities, whether treated as secured financings or as sales, we have sold the automobile contracts (through a subsidiary) to the securitization entity.
In all of our term securitizations and warehouse credit facilities, whether treated as secured financings or as sales, we have sold the automobile contracts (through a subsidiary) to the securitization entity.
The agreed valuation of the collateral for the 2021-1 Notes is the sum of the amounts on deposit in the underlying spread accounts for each related securitization and the over-collateralization of each related securitization, which is the difference between the outstanding principal balances of the related receivables less the principal balance of the outstanding notes issued in the related securitization.
At December 31, 2024 there was $50.0 million outstanding under this facility. 48 The agreed valuation of the collateral for the 2021-1 and 2024-1 Notes is the sum of the amounts on deposit in the underlying spread accounts for each related securitization and the over-collateralization of each related securitization, which is the difference between the outstanding principal balances of the related receivables less the principal balance of the outstanding notes issued in the related securitization.
Cash held in the various spread accounts is invested in high quality, liquid investment securities, as specified in the securitization agreements. The interest rate payable on the automobile contracts is significantly greater than the interest rate on the asset-backed notes.
Cash held in the various spread accounts is invested in high quality, liquid investment securities, as specified in the securitization agreements. The interest rate payable on the automobile contracts is significantly greater than the interest rate on the asset-backed notes. As a result, the residual interests described above historically have been a significant asset of ours.
We currently have and will continue to have a substantial amount of outstanding indebtedness. At December 31, 2023, we had approximately $2,566.5 million of debt outstanding.
We currently have and will continue to have a substantial amount of outstanding indebtedness. At December 31, 2024, we had approximately $3,130.9 million of debt outstanding.
The table below summarizes our employees by category as well as contract purchases and units in our managed portfolio as of, and for the years ended, December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Amount Amount ($ in millions) Contracts purchased (dollars) $ 1,357.8 $ 1,854.4 Contracts purchased (units) 65,137 81,935 Managed portfolio outstanding (dollars) $ 2,970.1 $ 2,795.4 Managed portfolio outstanding (units) 179,198 170,658 Number of Originations staff 185 182 Number of Sales staff 105 107 Number of Servicing staff 529 407 Number of other staff 71 88 Total number of employees 890 784 41 General and administrative expenses include costs associated with purchasing and servicing our portfolio of finance receivables, including expenses for facilities, credit services, and telecommunications.
The table below summarizes our employees by category as well as contract purchases and units in our managed portfolio as of, and for the years ended, December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Amount Amount ($ in millions) Contracts purchased (dollars) $ 1,681.9 $ 1,357.8 Contracts purchased (units) 77,009 65,137 Managed portfolio outstanding (dollars) $ 3,491.0 $ 2,970.1 Managed portfolio outstanding (units) 201,441 179,198 Number of Originations staff 195 185 Number of Sales staff 122 105 Number of Servicing staff 552 529 Number of other staff 64 71 Total number of employees 933 890 41 General and administrative expenses include costs associated with purchasing and servicing our portfolio of finance receivables, including expenses for facilities, credit services, and telecommunications.
We use words such as anticipate, estimate, plan, project, continuing, ongoing, expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements. See “ Cautionary Note Regarding Forward-Looking Statements .” Overview We are a specialty finance company.
We use words such as anticipate, estimate, plan, project, continuing, ongoing, expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements.
Results of Operations Comparison of Operating Results for the year ended December 31, 2023 with the year ended December 31, 2022 Revenues . During the year ended December 31, 2023, our revenues were $352.0 million, an increase of $22.3 million, or 6.8%, from the prior year revenues of $329.7 million.
Results of Operations Comparison of Operating Results for the year ended December 31, 2024 with the year ended December 31, 2023 Revenues . During the year ended December 31, 2024, our revenues were $393.5 million, an increase of $41.5 million, or 11.8%, from the prior year revenues of $352.0 million.
The primary reason for the increase in interest income is the 14.7% increase in the average balance of our loan portfolio over the prior year period. The interest yield on our total loan portfolio decreased from 12.0% in the prior year period to 11.3% in the current year period.
The primary reason for the increase in interest income is the 10.2% increase in the average balance of our loan portfolio over the prior year period. The interest yield on our total loan portfolio stayed the same at 11.3% in the prior year period to 11.3% in the current year period.
Interest expense represented 50.4% of total operating expenses in 2023. Interest on securitization trust debt increased by $50.8 million, or 71.9%, for the year ended December 31, 2023 compared to the prior year.
Interest expense represented 52.3% of total operating expenses in 2023. Interest on securitization trust debt increased by $39.6 million, or 32.6%, for the year ended December 31, 2024 compared to the prior year.
The Class A loans under the facility generally accrue interest during the revolving period at a per annum rate equal to one-month SOFR plus 3.00% per annum, with a minimum rate of 3.75% per annum and during the amortization period at a per annum rate equal to one-month SOFR plus 4.00% per annum, with a minimum rate of 4.75% per annum.
The Class A loans under the facility generally accrue interest during the revolving period at a per annum rate equal to the CP Cost of Funds Rate plus 2.85% per annum, with a minimum rate of 3.60% per annum and during the amortization period at a per annum rate equal to the CP Cost of Funds Rate plus 3.85% per annum, with a minimum rate of 4.60% per annum.
Under both structures, recourse to us by holders of the asset-backed securities and by the trust, for failure of the automobile contract obligors to make payments on a timely basis, is limited to the automobile contracts included in the securitizations or warehouse credit facilities, the spread accounts and our retained interests in the respective trusts.
Under both structures, recourse to us by holders of the asset-backed securities and by the trust, for failure of the automobile contract obligors to make payments on a timely basis, is limited to the automobile contracts included in the securitizations or warehouse credit facilities, the spread accounts and our retained interests in the respective trusts. 38 Accrual for Contingent Liabilities We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued.
This 17.5% increase was primarily driven by the increase in origination and servicing fees we earned from third party receivables that we began originating in May 2021. These fees were $9.3 million for the year ended December 31, 2023 and $6.8 million in the prior year period. Expenses .
This 20.8% decrease was primarily driven by the decrease in origination and servicing fees we earned from third party receivables. These fees were $7.3 million for the year ended December 31, 2024 and $9.3 million in the prior year period. Expenses .
Sales expense increased by $6.2 million to $23.0 million during the year ended December 31, 2022 and represented 10.8% of total operating expenses. We purchased $1,854.4 million of new contracts during the year ended December 31, 2022 compared to $1,146.3 million in the prior year period.
Sales expense increased by $1.5 million to $22.8 million during the year ended December 31, 2024 and represented 6.2% of total operating expenses. We purchased $1,681.9 million of new contracts during the year ended December 31, 2024 compared to $1,357.8 million in the prior year period.
We repaid this facility in full at its maturity in February 2021 and elected not to renew it. 36 In a securitization and in our warehouse credit facilities, we are required to make certain representations and warranties, which are generally similar to the representations and warranties made by dealers in connection with our purchase of the automobile contracts.
In a securitization and in our warehouse credit facilities, we are required to make certain representations and warranties, which are generally similar to the representations and warranties made by dealers in connection with our purchase of the automobile contracts.
For the year ended December 31, 2022, we recorded income tax expense of $30.2 million, representing a 26% effective tax rate. In the prior period, our income tax expense was $18.2 million, representing a 28% effective tax rate. Liquidity and Capital Resources Liquidity Our business requires substantial cash to support our purchases of automobile contracts and other operating activities.
In the prior period, our income tax expense was $15.6 million, also representing a 26% effective tax rate. 44 Liquidity and Capital Resources Liquidity Our business requires substantial cash to support our purchases of automobile contracts and other operating activities.
In addition, we have accessed other sources, such as residual financings and subordinated debt in order to finance our continuing operations. 49 The acquisition of automobile contracts for subsequent financing in securitization transactions, and the need to fund spread accounts and initial overcollateralization, if any, and increase credit enhancement levels when those transactions take place, results in a continuing need for capital.
The acquisition of automobile contracts for subsequent financing in securitization transactions, and the need to fund spread accounts and initial overcollateralization, if any, and increase credit enhancement levels when those transactions take place, results in a continuing need for capital.
Employee costs include base salaries, commissions and bonuses paid to employees, and certain expenses related to the accounting treatment of outstanding stock options, and are one of our most significant operating expenses. These costs (other than those relating to stock options) generally fluctuate with the level of applications and automobile contracts processed and serviced.
Employee costs include base salaries, commissions and bonuses paid to employees, and certain expenses related to the accounting treatment of outstanding stock options, and are one of our most significant operating expenses.
Interest expense on our subordinated renewable notes was $1.8 million in 2023 compared to $2.3 million in the prior year. The average balance of the notes decreased from $26.8 million in the prior year to $20.9 million for the year ended December 31, 2023.
The average balance of the notes increased from $20.9 million in the prior year to $22.9 million for the year ended December 31, 2024. The average interest rate on our subordinated notes was 9.8% during 2024 compared to 8.7% million in 2023.
We anticipate repaying debt due in 2024 with a combination of cash flows from operations and the potential issuance of new debt.
(2) Long-term debt represents subordinated renewable notes. 46 We anticipate repaying debt due in 2025 with a combination of cash flows from operations and the potential issuance of new debt.
Rather we recognize the costs of acquisition as expenses in the period incurred. 37 Term Securitizations Our term securitization structure has generally been as follows: We sell automobile contracts we acquire to a wholly-owned special purpose subsidiary, which has been established for the limited purpose of buying and reselling our automobile contracts.
Term Securitizations Our term securitization structure has generally been as follows: We sell automobile contracts we acquire to a wholly-owned special purpose subsidiary, which has been established for the limited purpose of buying and reselling our automobile contracts. The special-purpose subsidiary then transfers the same automobile contracts to another entity, typically a statutory trust.
For the year ended December 31, 2023, we recorded a reduction to provision for credit losses on finance receivables in the amount of $22.3 million. In the prior year period, we recorded similar reductions to provision for credit losses in the amount of $28.1 million. The reserve decreases were primarily due to better than expected credit performance for these receivables.
For the year ended December 31, 2024, we recorded a reduction to provision for credit losses on finance receivables in the amount of $5.3 million. In the prior year period, we recorded similar reductions to provision for credit losses in the amount of $22.3 million.
Securitizations are transactions in which we sell a specified pool of contracts to a special purpose subsidiary of ours, which in turn issues asset-backed securities to fund the purchase of the pool of contracts from us. 35 Securitization and Warehouse Credit Facilities Throughout the period for which information is presented in this report, we have purchased automobile contracts with the intention of financing them on a long-term basis through securitizations, and on an interim basis through warehouse credit facilities.
Securitization and Warehouse Credit Facilities Throughout the period for which information is presented in this report, we have purchased automobile contracts with the intention of financing them on a long-term basis through securitizations, and on an interim basis through warehouse credit facilities.
The average interest rate on our subordinated notes was 8.7% for the both years. 42 The following table presents the components of interest income and interest expense and a net interest yield analysis for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (Dollars in thousands) Annualized Annualized Average Average Average Average Balance (1) Interest Yield/Rate Balance (1) Interest Yield/Rate Interest Earning Assets Loan portfolio 2,913,571 329,219 11.3% 2,539,110 305,237 12.0% Interest Bearing Liabilities Warehouse lines of credit $ 181,742 19,192 10.6% $ 130,122 10,310 7.9% Residual interest financing 50,000 4,199 8.4% 50,488 4,243 8.4% Securitization trust debt 2,333,472 121,408 5.2% 2,020,036 70,627 3.5% Subordinated renewable notes 20,936 1,832 8.7% 26,806 2,344 8.7% $ 2,586,150 146,631 5.7% $ 2,227,452 87,524 3.9% Net interest income/spread $ 182,588 $ 217,713 Net interest margin (3) 6.3% 8.6% Ratio of average interest earning assets to average interest bearing liabilities 113% 114% (1) Average balances are based on month end balances except for warehouse lines of credit, which are based on daily balances.
The following table presents the components of interest income and interest expense and a net interest yield analysis for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (Dollars in thousands) Annualized Annualized Average Average Average Average Balance (1) Interest Yield/Rate Balance (1) Interest Yield/Rate Interest Earning Assets Loan portfolio $ 3,209,988 $ 363,962 11.3% $ 2,913,571 $ 329,219 11.3% Interest Bearing Liabilities Warehouse lines of credit $ 178,518 19,292 10.8% $ 181,742 19,192 10.6% Residual interest financing 91,803 8,702 9.5% 50,000 4,199 8.4% Securitization trust debt 2,596,554 161,014 6.2% 2,333,472 121,408 5.2% Subordinated renewable notes 22,886 2,249 9.8% 20,936 1,832 8.7% $ 2,889,761 191,257 6.6% $ 2,586,150 146,631 5.7% Net interest income/spread $ 172,705 $ 182,588 Net interest margin (3) 5.4% 6.3% Ratio of average interest earning assets to average interest bearing liabilities 111% 113% (1) Average balances are based on month end balances except for warehouse lines of credit, which are based on daily balances.
The Class B loans under the facility generally accrue interest during the revolving period at a per annum rate equal to 8.50% per annum and during the amortization period at a per annum rate equal to 9.50% per annum.
The Class B loans under the facility generally accrue interest during the revolving period at a per annum rate equal to the Adjusted Term SOFR plus 6.40% per annum, with a minimum rate of 7.15% per annum and during the amortization period at a per annum rate equal to the Adjusted Term SOFR plus 7.40% per annum, with a minimum rate of 8.15% per annum.
In July 2022, we renewed our two-year revolving credit agreement with Citibank, N.A., and doubled the capacity from $100 million to $200 million. This facility was amended to extend the revolving period to July 2024 and to include an amortization period through July 2025 for any receivables pledged to the facility at the end of the revolving period.
In July 2024, we renewed our two-year revolving credit agreement to extend the revolving period to July 2026 and to include an amortization period through July 2027 for any receivables pledged to the facility at the end of the revolving period.
General and administrative expenses were $50.0 million, an increase of $12.4 million, or 32.9%, compared to the previous year and represented 17.2% of total operating expenses. Interest expense for the year ended December 31, 2023 increased by $59.1 million to $146.6 million, or 67.5%, compared to $87.5 million in the previous year.
General and administrative expenses were $54.7 million, an increase of $4.7 million, or 9.4%, compared to the previous year and represented 14.9% of total operating expenses. Interest expense for the year ended December 31, 2024 increased by $44.6 million to $191.3 million, or 30.4%, compared to $146.6 million in the previous year.
We typically sell these automobile contracts to the trust at face value and without recourse, except that representations and warranties similar to those provided by the dealer to us are provided by us to the trust.
The trust issues interest-bearing asset-backed securities, in a principal amount equal to or less than the aggregate principal balance of the automobile contracts. We typically sell these automobile contracts to the trust at face value and without recourse, except that representations and warranties similar to those provided by the dealer to us are provided by us to the trust.
Prior to the expiration of the revolving period in January 2024, the revolving period was extended to March 31, 2024. 51 Capital Resources Securitization trust debt is repaid from collections on the related receivables, and becomes due in accordance with its terms as the principal amount of the related receivables is reduced.
At December 31, 2024 there was $145.6 million outstanding under this facility. Capital Resources Securitization trust debt is repaid from collections on the related receivables, and becomes due in accordance with its terms as the principal amount of the related receivables is reduced.
The allowance applies only to our finance receivables originated through December 2017, which we refer to as our legacy portfolio. Finance receivables that we have originated since January 2018 are accounted for at fair value. Under the fair value method of accounting, we recognize interest income net of expected credit losses.
The legacy portfolio balance decreased from $27.6 million on December 31, 2023 to $5.4 million on December 31, 2024. Finance receivables that we have originated since January 2018 are accounted for at fair value. Under the fair value method of accounting, we recognize interest income net of expected credit losses.
We have been dependent on warehouse credit facilities to purchase automobile contracts and our securitization transactions for long term financing of our contracts.
We have been dependent on warehouse credit facilities to purchase automobile contracts and our securitization transactions for long term financing of our contracts. In addition, we have accessed other sources, such as residual financings and subordinated debt in order to finance our continuing operations.
Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $826.3 million in 2024, $618.4 million in 2025, $386.5 million in 2026, $242.8 million in 2027, $152.6 million in 2028, and $38.8 million in 2029. (2) Long-term debt represents subordinated renewable notes.
Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $987.8 million in 2025, $696.4 million in 2026, $470.5 million in 2027, $275.1 million in 2028, $126.6 million in 2029, and $38.0 million in 2030.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA decrease in excess spread cash flow could adversely affect our earnings and cash flow. 53 To mitigate, but not eliminate, the short-term risk relating to interest rates payable under the warehouse facilities, we have historically held automobile contracts in the warehouse credit facilities for less than four months.
Biggest changeTo mitigate, but not eliminate, the short-term risk relating to interest rates payable under the warehouse facilities, we have historically held automobile contracts in the warehouse credit facilities for less than four months.
Despite these mitigation strategies, an increase in prevailing interest rates would cause us to receive less excess spread cash flows on automobile contracts, and thus could adversely affect our earnings and cash flows.
Despite these mitigation strategies, an increase in prevailing interest rates would cause us to receive less excess spread cash flows on automobile contracts, and thus could adversely affect our earnings and cash flows. 49
Our customers, on the other hand, pay fixed rates of interest on the automobile contracts, set at the time they purchase the underlying vehicles.
Our customers, on the other hand, pay fixed rates of interest on the automobile contracts, set at the time they purchase the underlying vehicles. A decrease in excess spread cash flow could adversely affect our earnings and cash flow.

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