CPS Reports 9.2% Revenue Growth, Net Income Decline in Q3 2024

Consumer Portfolio Services, Inc. (CPS) reported significant financial developments for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Total revenues for Q3 2024 reached $100.6 million, marking a 9.2% increase from $92.1 million in Q3 2023. This growth was primarily driven by an increase in interest income, which rose to $93.2 million, up 11.9% from $83.3 million in the prior year. However, net income for Q3 2024 decreased to $4.8 million, down from $10.4 million in Q3 2023, reflecting a decline in profitability.

For the nine-month period, total revenues increased by 10.8% to $288.2 million, compared to $260.0 million in the same period of 2023. Interest income for the nine months also rose to $265.8 million, an 8.1% increase from $246.0 million. Despite the revenue growth, net income for the nine months fell sharply to $14.1 million from $38.2 million in the previous year, indicating challenges in maintaining profitability amid rising expenses.

Total operating expenses for Q3 2024 were $93.7 million, a 20.4% increase from $77.9 million in Q3 2023, driven by higher employee costs and interest expenses. Interest expense for the quarter surged to $50.1 million, accounting for 53.4% of total operating expenses, compared to $37.9 million in the prior year. The annualized average rate on securitization trust debt increased to 6.4% from 5.4%, contributing to the higher interest expenses.

CPS's balance sheet showed substantial growth, with total assets increasing to $3.5 billion as of September 30, 2024, up from $2.9 billion at the end of 2023. Finance receivables measured at fair value also rose to $3.1 billion, compared to $2.7 billion at year-end 2023. The company reported a significant increase in restricted cash, which grew to $271.0 million from $119.3 million.

In terms of strategic developments, CPS completed a $50 million securitization of residual interests in March 2024 and renewed revolving credit agreements with Citibank and Ares Agent Services, enhancing its liquidity position. The company also reported an increase in new contracts purchased during the nine months, totaling $1.2 billion, up from $1.1 billion in the prior year.

Overall, while CPS experienced revenue growth, the decline in net income and rising expenses highlight ongoing challenges in the current market environment.