What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-03-12 compared with 2024-03-15 · 124 added, 138 removed, 690 unchanged (28% of the section changed)

12 unchanged sentences

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 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.

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.

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.

7 unchanged sentences

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.

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.

4 unchanged sentences

Our sales representatives represent us exclusively.

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.

Our sales representatives present dealers with a sales package, which includes our promotional material containing

the terms offered by us for the purchase of automobile contracts, a copy of our standard-form dealer agreement, and required documentation

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.

Our sales representatives present dealers with a sales package, which includes our promotional material containing the

terms offered by us for the purchase of automobile contracts, a copy of our standard-form dealer agreement, and required documentation

relating to automobile contracts.

13 unchanged sentences

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.

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

18 unchanged sentences

As of December

31, 2023, we had two such short-term warehouse facilities, each with a maximum borrowing amount of $200 million.

31, 2024, we had two such short-term warehouse facilities with a total maximum borrowing capacity of $535 million.

Sub-Prime Auto Finance Industry

39 unchanged sentences

application aggregator), 43% via another aggregator, Route One.

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.

For the year ended December 31, 2023, our automated application decisioning system produced our initial decision

within seconds on approximately 99% of those 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.

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,

40 unchanged sentences

on the perceived credit risk of and, in some cases, the interest rate on the automobile contract.

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:

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:

Average net acquisition fee charged (paid) to dealers (1)

70 unchanged sentences

we purchase from dealers, we require that the contract be originated by a dealer that has entered into a dealer agreement with us.

our direct lending platform, we require the customer to sign a note and security agreement.

In each case, the contract is secured by a

first priority lien on a new or used automobile, light truck or passenger van and must meet our funding criteria.

In addition, each automobile

contract requires the customer to maintain physical damage insurance covering the financed vehicle and naming us as a loss payee.

nonetheless, suffer a loss upon theft or physical damage of any financed vehicle if the customer fails to maintain insurance as required

by the automobile contract and is unable to pay for repairs to or replacement of the vehicle.

our direct lending platform, we required the customer to sign a note and security agreement.

In each case, the contract is secured by

a first priority lien on a new or used automobile, light truck or passenger van and must meet our funding criteria.

In addition, each

automobile contract requires the customer to maintain physical damage insurance covering the financed vehicle and naming us as a loss

We may, nonetheless, suffer a loss upon theft or physical damage of any financed vehicle if the customer fails to maintain insurance

as required by the automobile contract and is unable to pay for repairs to or replacement of the vehicle.

Our technology and human expertise

93 unchanged sentences

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.

In support of our collection

activities, we maintain a computerized collection system specifically designed to service automobile contracts with sub-prime customers.

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.

In support of our collection activities, we maintain a computerized collection system specifically designed to service automobile contracts

with sub-prime customers.

We engage a nearshore third-party call center to supplement the efforts the collectors in our five branch locations.

As of December 31,

2023, our nearshore partner had approximately 47 agents assigned to our portfolio.

As of December 31, 2024, our nearshore partner had approximately 47 agents assigned to our portfolio.

We attempt to make telephonic

12 unchanged sentences

the reason for the delinquency and when we can expect to receive the payment.

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.

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.

payment is made by the promise date and the account is no longer delinquent, the account is routed out of the collection system.

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.

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.

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.

If a customer fails to make

48 unchanged sentences

Our internal credit performance data consistently show that new receivables have lower levels of delinquency and losses early

in their lives, with delinquencies increasing throughout their lives and incremental losses gradually increasing to a peak around 18 months,

after which they gradually decrease.

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.

Broad economic factors such as

pandemic, recession and significant changes in unemployment levels influence the credit performance of our portfolio, as does the weighted

in their lives, with delinquencies increasing throughout their lives and incremental losses gradually increasing to a peak around 18

months, after which they gradually decrease.

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.

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.

3 unchanged sentences

and Extension Experience

Delinquency and Extension Experience (1)

Total Managed Portfolio (Excludes Third Party Portfolio)

December 31, 2024

1 unchanged sentence

December 31, 2022

Number of Contracts

(Dollars in thousands)

Delinquency Experience

(Dollars in thousands)

Gross servicing portfolio (1)

3 unchanged sentences

Total delinquencies and amount in repossession (2)

Delinquencies as a percentage

Delinquencies as a percentage of gross servicing portfolio

6 unchanged sentences

Total accounts with extensions

amounts and percentages are based on the amount remaining to be repaid on each automobile

The information in the table represents the gross principal amount of all automobile

contracts we purchased, including automobile contracts we subsequently sold in securitization

transactions that we continue to service.

The table does not include certain contracts we

have serviced for third parties on which we earn servicing fees only, and have no credit

consider an automobile contract delinquent when an obligor fails to make at least 90% of

a contractually due payment by the following due date, which date may have been extended

within limits specified in the servicing agreements.

(1) All amounts and percentages

are based on the amount remaining to be repaid on each automobile contract.

The information in the table represents the gross principal

amount of all automobile contracts we purchased, including automobile contracts we subsequently sold in securitization transactions that

we continue to service.

The table does not include certain contracts we have serviced for third parties on which we earn servicing fees

only, and have no credit risk.

(2) We consider an automobile contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following

due date, which date may have been extended within limits specified in the servicing agreements.

The period of delinquency is based on

the number of days payments are contractually past due.

Automobile contracts less than 31

days delinquent are not included.

The delinquency aging categories shown in the tables reflect

the effect of extensions.

in repossession represents the contract balance on financed vehicles that have been repossessed

but not yet liquidated.

not recognize interest income on accounts past due more than 90 days.

Automobile contracts less than 31 days delinquent are not included.

The delinquency

aging categories shown in the tables reflect the effect of extensions.

(3) Amount in repossession represents the contract balance on financed vehicles that have been repossessed but not yet liquidated.

(4) We do not recognize interest income on accounts past due more than 90 days.

Net Credit Loss Experience

Total Managed Portfolio (Excludes Third Party Portfolio)

Total Managed Portfolio

(Excludes Third Party Portfolio)

Year Ended December 31,

30 unchanged sentences

problem that may be resolved with an extension.

The credit assessment for granting an extension is initially made by our collector, who

bases the recommendation on the collector’s discussions with the obligor.

In such assessments the collector will consider, among

other things, the following factors:

The credit assessment for granting an extension

is initially made by our collector, who bases the recommendation on the collector’s discussions with the obligor.

In such assessments

the collector will consider, among other things, the following factors:

(1) the reason the obligor has fallen behind in payments;

(2) whether or not the reason for the

delinquency is temporary, and if it is, have conditions changed such that the obligor can begin making regular monthly payments again

after the extension;

whether or not the reason for the delinquency is temporary, and if it is, have conditions changed such that the obligor can begin making

regular monthly payments again after the extension;

(3) the obligor’s past payment history, including past extensions if applicable;

and (4) the obligor’s

willingness to communicate and cooperate on resolving the delinquency.

If the collector believes the obligor is a good candidate for

an extension, he must obtain approval from his supervisor, who will review the same factors stated above prior to offering the extension

to the obligor.

During 2020 we incorporated an algorithmic extension score card which provides our staff with an objective and quantitative

assessment of whether or not a obligor is a good candidate for an extension, based on the current circumstances of the account.

The extension

score card was developed by our internal risk management team and is derived from the post-extension performance of accounts in our managed

(4) the obligor’s willingness to communicate and cooperate on resolving the delinquency.

If the collector believes the obligor is

a good candidate for an extension, he must obtain approval from his supervisor, who will review the same factors stated above prior to

offering the extension to the obligor.

During 2020 we incorporated an algorithmic extension score card which provides our staff with an

objective and quantitative assessment of whether or not a obligor is a good candidate for an extension, based on the current circumstances

of the account.

The extension score card was developed by our internal risk management team and is derived from the post-extension performance

of accounts in our managed portfolio.

After receiving an extension,

6 unchanged sentences

% Active or Paid Off at December 31, 2024

Charged Off > 6 Months

After Extension

% Charged Off > 6 Months

After Extension

Charged Off > 6 Months After Extension

% Charged Off > 6 Months After Extension

Charged Off <= 6 Months After Extension

% Charged Off <= 6 Months After Extension

Avg Months to Charge Off Post Extension

10 unchanged sentences

In such cases, despite the ultimate loss, we received additional payments of principal and interest that otherwise we would not have

Additional information about our extensions is provided in the tables below:

Additional information about our extensions is provided in the tables

For the Year Ended

29 unchanged sentences

than not that the delinquency will not be resolved and will ultimately result in a charge-off.

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.

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.

If an obligor exceeds the

47 unchanged sentences

$ in thousands

Number of Term Securitizations

Amount of Receivables

Number of Term

Securitizations

From time to time we have

4 unchanged sentences

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.

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.

residual interests in the eight CPS securitizations conducted from October 2018 through September 2020.

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.

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

The sold notes (“2024-1 Notes”), issued by CPS Auto Securitization Trust 2024-1, consist of a single class with a coupon

As of December 31, 2024, the notes had a principal balance of $50.0 million.

Generally, prior to a securitization

5 unchanged sentences

was most recently renewed in July 2024, extending the revolving period to July 2026, with an optional amortization period through July

In addition, the capacity was doubled from $100 million to $200 million at the July 2022 renewal.

In addition, the capacity was increased from $200 million to $335 million in December 2024.

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 June 2022, we doubled the capacity for this facility from $100 million to

$200 million.

Prior to the expiration of the revolving period in January 2024, the revolving period was extended to March 31, 2024.

In June 2022, we increased the capacity of our credit agreement with Ares Agent Services, L.P.

$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.

In a securitization and in

80 unchanged sentences

balance within our industry and market areas and could have a material adverse effect on us.

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.

In addition to the CFPB, other

28 unchanged sentences

college tuition and costs incurred to obtain job related certifications and licenses.

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).

Broken out by function, our human capital was allocated

15 were senior management personnel;

Workforce Allocation and

Diversity We had 933 employees as of December 31, 2024.

Our employee population was 67% female, and 71% self-identified as ethnically

diverse (defined as all EEOC classifications other than white).

Broken out by function, our human capital was allocated thus:

senior management personnel;

552 were servicing personnel;

195 were automobile contract origination personnel;

were sales personnel (67 of whom were sales representatives);

56 were various administrative personnel including human resources,

legal, accounting and systems.

122 were sales personnel;

50 were various administrative personnel including human resources, legal, accounting and systems.

Compensation and benefits

13 unchanged sentences

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.

We foster collaboration through charity committees which plan events to raise funds

and/or provide resources to various 501(c)(3) organizations in our communities.

Our COO holds town hall meetings to provide company-wide updates and conduct open Q&A

for all employees.

We foster collaboration through charity committees which plan events to raise funds and/or provide resources to various

501(c)(3) organizations in our communities.

We also offer paid community service time.

in human capital management include average employee tenure and annual turnover rate.

We believe that our relations with our employees

We are not a party to any collective bargaining agreement.

Metrics used in human capital management include

average employee tenure and annual turnover rate.

We believe that our relations with our employees are good.

We are not a party to any

collective bargaining agreement.

Available Information

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business