What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-12 compared with 2024-03-15 · 131 added, 322 removed, 597 unchanged (43% of the section changed)

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expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements.

See “ Cautionary Note Regarding Forward-Looking Statements .”

See "Cautionary

Note Regarding Forward-Looking Statements."

Discussions of 2022 items

and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion

and Analysis of Financial Condition and Results of Operations” in Item 7 of the Company’s Annual Report on Form 10-K for the

fiscal year ended December 31, 2023.

We are a specialty finance

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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.

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.

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.

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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.

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Number of Term Securitizations

Amount of Receivables

Generally, prior to a securitization

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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 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.

We previously had a third facility.

This $100 million facility was established in April 2015 and was renewed in April 2017 and again in February 2019, extending the revolving

period to February 2021.

We repaid this facility in full at its maturity in February 2021 and elected not to renew it.

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.

In a securitization and in

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our liquidity and results of operations.

Critical Accounting Policies

Critical Accounting Estimates

We believe that our accounting

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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.

of December 31, 2024 does not exceed $3.2 million.

Accordingly, we believe that

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to recently acquired receivables and increases or decreases in our estimates of future net losses.

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.

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.

The fair value mark in the current

period also includes an increase in our estimates of cash receipts from interest and fees compared to our estimates at the time of acquisition.

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.

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

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for the increase in interest income is the 10.2% increase in the average balance of our loan portfolio over the prior year period.

interest yield on our total loan portfolio decreased from 12.0% in the prior year period to 11.3% in the current year period.

reason for the decrease in total interest yield is that the receivables measured at fair value makes up a larger portion of our total

loan portfolio in the current year period.

The interest yield on receivables measured at fair value is calculated taking into account

expected losses and is therefore less than the yield on other finance receivables.

The table below shows the average balance and interest

yield of our loan portfolio for the years ended December 31, 2023 and 2022:

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.

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,

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for the year ended December 31, 2024 compared to $10.8 million for the year ended December 31, 2023.

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.

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.

Our operating expenses

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to such receivables).

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.

that affect margins and net income include changes in the automobile and automobile finance market environments, and macroeconomic factors

such as interest rates and changes in the unemployment level.

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.

Factors that affect margins and net income include changes in the automobile and automobile finance

market environments, and macroeconomic factors such as interest rates and changes in the unemployment level.

Employee costs include base

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These costs (other than those relating to stock options) generally fluctuate with

the level of applications and automobile contracts processed and serviced.

the level of applications and automobile contracts processed and serviced, which can be measured by our managed portfolio outstanding.

Other operating expenses consist

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$366.1 million for the year ended December 31, 2024, compared to $290.9 million for the prior year, an increase of $75.2 million, or 25.8%.

The increase is primarily due to increases in interest expense and general and administrative expenses.

The increase is primarily due to increases in interest expense, employee costs and the amount of reductions to provision for credit losses

Employee costs increased by

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costs were $88.1 million in the prior year, or 30.3% of total operating expenses.

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

The increase in employee costs can be attributed to

the increase in our outstanding managed portfolio.

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

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expense represented 52.3% 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.

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

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 blended interest rates on new term securitizations have been increasing since 2022.

For each quarterly securitization

transaction, the blended cost of funds is ultimately the result of many factors including the market interest rates for benchmark swaps

of various maturities against which our bonds are priced and the margin over those benchmarks that investors are willing to accept, which

in turn, is influenced by investor demand for our bonds at the time of the securitization.

These and other factors have resulted in fluctuations

in our securitization trust debt interest costs.

The blended interest rates of our recent securitizations are summarized in the table

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 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.

For each quarterly securitization transaction, the blended cost of funds is ultimately

the result of many factors including the market interest rates for benchmark swaps of various maturities against which our bonds are

priced and the margin over those benchmarks that investors are willing to accept, which in turn, is influenced by investor demand for

our bonds at the time of the securitization.

These and other factors have resulted in fluctuations in our securitization trust debt interest

The blended interest rates of our recent securitizations are summarized in the table below:

Blended Cost of Funds on Recent Asset-Backed Term Securitizations

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The increase was due

to higher rates and the higher utilization of our credit lines during 2023 compared to 2022.

The average balance of our warehouse debt

was $181.7 million during 2023 compared to $130.1 million in 2022.

Interest expense on residual

interest financing was $4.2 million for each of the years ended December 31, 2023 and 2022.

to higher rates of our credit lines during 2024 compared to 2023.

The average yield of our warehouse debt was 10.8% during 2024 compared

to 10.6% million in 2023.

In June 2021, we completed a

residual interest financing of our residual interests from previously issued securitizations in the amount of $50.0 million.

2024, we completed a new residual interest financing of our residual interests from previously issued securitizations in the amount of

$50.0 million.

Interest expense on residual interest financing was $8.7 million for the year ended December 31, 2024 compared to $4.2

million in the prior year.

Interest expense on our subordinated

renewable notes was $2.2 million in 2024 compared to $1.8 million in the prior year.

The average balance of the notes decreased from $26.8

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

8.7% for the both years.

9.8% during 2024 compared to 8.7% million in 2023.

The following table presents

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Ratio of average interest earning assets to average interest bearing liabilities

(1) Average balances are

based on month end balances except for warehouse lines of credit, which are based on daily balances.

Average balances are based on month end balances except for

warehouse lines of credit, which are based on daily balances.

Net of deferred fees and direct costs.

(3) Net interest income divided by average interest earning

Net interest income divided by average interest earning assets.

Year Ended December 31, 2024

Compared to December 31, 2023

(In thousands)

Interest Earning Assets

Loan portfolio

Interest Bearing Liabilities

Warehouse lines of credit

Residual interest financing

Securitization trust debt

Subordinated renewable notes

Net interest income/spread

Effective January 1, 2020,

the Company adopted Accounting Standards Codification Topic 326 - Financial Instruments - Credit Losses:

Measurement of Credit Losses

on Financial Instruments.

The amendment introduces a new credit reserving model known as the Current Expected Credit Loss model, generally

referred to as CECL.

Adoption of CECL required the establishment of an allowance for the remaining expected lifetime credit losses on

the portion of the Company’s receivable portfolio that was originated prior to January 2018.

To comply with CECL, the Company recorded

an addition to its allowance for finance credit losses of $127.0 million in 2020.

In accordance with the rules for adopting CECL, the

offset to the addition to the allowance for finance credit losses was a tax affected reduction to retained earnings using the modified

retrospective method.

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.

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

Under the fair value method of accounting, we recognize interest income net of expected credit losses.

Thus, no provision for credit

loss expense is recorded for finance receivables measured at fair value.

Sales expense consists primarily

of commission-based compensation paid to our employee sales representatives.

Our sales representatives earn a salary plus commissions

based on volume of contract purchases and sales of ancillary products and services that we offer our dealers.

Sales expense decreased

by $1.8 million to $21.2 million during the year ended December 31, 2023 and represented 7.3% of total operating expenses.

$1,357.8 million of new contracts during the year ended December 31, 2023 compared to $1,854.4 million in the prior year period.

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.

In the prior period, our income tax

expense was $30.2 million, also representing a 26% effective tax rate.

Comparison of Operating Results for the year ended December 31,

2022 with the year ended December 31, 2021

During the year ended

December 31, 2022, our revenues were $329.7 million, an increase of $61.9 million, or 23.1%, from the prior year revenues of $267.8 million.

The primary reason for the increase in revenues is the increase in interest income resulting from the increase in the average outstanding

balance of finance receivables measured at fair value.

In addition, mark ups to the finance receivables measured at fair value also contributed

to the increase in revenues during the year.

Revenues for the year ended December 31, 2022 include a $15.3 million mark up to the recorded

value of the finance receivables measured at fair value.

The marks are estimates based on our evaluation of the appropriate fair value

and future earnings rate of existing receivables compared to recently acquired receivables and increases or decreases in our estimates

of future net losses.

Results for the nine-month period ended September

30, 2022 included the $15.3 million mark to the carrying value of the portion of the receivables portfolio accounted for at fair value.

The mark-up was the result of lower than expected losses during the period as our previous estimates for higher losses due to the pandemic

had not materialized.

In the fourth quarter of 2022, our re-evaluation of the fair values of these receivables resulted in a positive

mark for certain older receivables and a negative mark to the fair values of newer receivables that largely offset each other.

on a net basis, no mark was taken in the fourth quarter of 2022.

Revenues for the prior year period include a $4.4 million mark down to

the fair value portfolio.

Revenues for the year ended

December 31, 2021 include a $4.4 million mark down to the fair value portfolio.

Interest income for the year

ended December 31, 2022 increased $39.0 million, or 14.6%, to $305.2 million from $266.2 million in the prior year.

The primary reason

for the increase in interest income is the 32.5% increase in the average balance of finance receivables measured at fair value over the

prior year period.

The table below shows the outstanding and average balances of our portfolio held by consolidated subsidiaries for the

years ended December 31, 2022 and 2021:

Year Ended December 31,

(Dollars in thousands)

Interest Earning Assets

Finance receivables

Finance receivables measured at fair value

Other income was $9.2 million

for the year ended December 31, 2022 compared to $6.0 million for the year ended December 31, 2021.

This 54.1% 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 $6.8 million for the year ended December 31, 2022 and $1.3 million in the prior year period.

Our operating expenses

consist largely of interest expense, provision for credit losses, employee costs, sales and general and administrative expenses.

for credit losses is affected by the balance and credit performance of our portfolio of finance receivables (other than our portfolio

of finance receivables measured at fair value, as to which expected credit losses have the effect of reducing the interest rate applicable

to such receivables).

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.

that affect margins and net income include changes in the automobile and automobile finance market environments, and macroeconomic factors

such as interest rates and changes in the unemployment level.

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.

Other operating expenses consist

largely of facilities expenses, telephone and other communication services, credit services, computer services, sales and advertising

expenses, and depreciation and amortization.

Total operating expenses were

$213.5 million for the year ended December 31, 2021, compared to $202.1 million for the prior year, an increase of $11.5 million, or 5.7%.

The increase is primarily due to increases in interest expense, sales expense, employee costs and general and administrative expenses.

Reductions in provisions for credit losses offset some of the increase in operating expenses.

Employee costs increased by

$3.7 million or 4.7%, to $84.3 million during the year ended December 31, 2022, representing 39.5% of total operating expenses.

costs were $80.5 million in the prior year, or 39.9% of total operating expenses.

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, 2022

December 31, 2022

December 31, 2021

($ in millions)

Contracts purchased (dollars)

Contracts purchased (units)

Managed portfolio outstanding (dollars)

Managed portfolio outstanding (units)

Number of Originations staff

Number of Sales staff

Number of Servicing staff

Number of other staff

Total number of employees

General and administrative expenses

include costs associated with purchasing and servicing our portfolio of finance receivables, including expenses for facilities, credit

services, and telecommunications.

General and administrative expenses were $37.6 million, an increase of $3.0 million, or 8.7%, compared

to the previous year and represented 17.6% of total operating expenses.

Interest expense for the year

ended December 31, 2022 increased by $12.3 million to $87.5 million, or 16.3%, compared to $75.2 million in the previous year.

expense represented 41.0% of total operating expenses in 2022.

The primary reason for the increase in interest expense is the increase

in interest expense on our warehouse lines of credit and securitization trust debt.

Interest on securitization trust

debt increased by $6.2 million, or 9.7%, for the year ended December 31, 2022 compared to the prior year.

The average balance of securitization

trust debt increased 11.0% to $2,020.0 million for the year ended December 31, 2022 compared to $1,819.9 million for the year ended December

The blended interest rates on new term securitizations have increased in 2022 after decreasing in 2021.

For any particular quarterly

securitization transaction, the blended cost of funds is ultimately the result of many factors including the market interest rates for

benchmark swaps of various maturities against which our bonds are priced and the margin over those benchmarks that investors are willing

to accept, which in turn, is influenced by investor demand for our bonds at the time of the securitization.

These and other factors have

resulted in fluctuations in our securitization trust debt interest costs.

The blended interest rates of our recent securitizations are

summarized in the table below:

Blended Cost of Funds on Recent Asset-Backed Term Securitizations

Blended Cost of Funds

September 2020

The annualized average rate

on our securitization trust debt was 3.5% for the years ended December 31, 2022 and 2021.

The annualized average rate is influenced by

the manner in which the underlying securitization trust bonds are repaid.

The rate tends to increase over time on any particular securitization

since the structures of our securitization trusts generally provide for sequential repayment of the shorter term, lower interest rate

bonds before the longer term, higher interest rate bonds.

Interest expense on warehouse

lines of credit was $10.3 million for the year ended December 31, 2022 compared to $4.4 million in the prior year.

Lower rates were offset

by higher utilization of our credit lines during the year compared to last year.

The average balance of our warehouse debt was $130.1

million during 2022 compared to $51.3 million in 2021.

Interest expense on residual

interest financing was $4.2 million in the year ended December 31, 2022 compared to $3.8 million in the prior year as the average balance

has increased.

Interest expense on our subordinated

renewable notes decreased by $297,000, or 11.3%, for the year ended December 31, 2022 compared to the prior year.

The average balance

of the notes increased from $25.3 million in the prior year to $26.8 million for the year ended December 31, 2022.

The average interest

rate on our subordinated notes decreased to 8.7% for the year ended December 31, 2022 from 10.5% for the year ended December 31, 2021.

The following table presents

the components of interest income and interest expense and a net interest yield analysis for the years ended December 31, 2022 and 2021:

Year Ended December 31,

(Dollars in thousands)

Change Due to Volume

Change Due to Rate

Interest Earning Assets

Loan portfolio

Interest Bearing Liabilities

Warehouse lines of credit

Residual interest financing

Securitization trust debt

Subordinated renewable notes

Net interest income/spread

Net interest margin (3)

Ratio of average interest earning assets to average interest bearing liabilities

(1) Average balances are based on month end

balances except for warehouse lines of credit, which are based on daily balances.

(2) Net of deferred fees and direct costs.

(3) Net interest income divided by average interest earning

Year Ended December 31, 2022

Compared to December 31, 2021

(In thousands)

Interest Earning Assets

Loan portfolio

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Net interest income/spread

The annualized yield on our finance receivables

was 12.0% for 2022 compared to 12.4% in 2021.

The interest yield on receivables measured at fair value is reduced to take account of expected

losses and is therefore less than the yield on other finance receivables.

The average balance of these fair value receivables was $2,388.2

million for the year ended December 31, 2022 compared to $1,802.6 million in the prior year period.

Effective January 1, 2020,

the Company adopted Accounting Standards Codification Topic 326 - Financial Instruments - Credit Losses:

Measurement of Credit Losses

on Financial Instruments.

The amendment introduces a new credit reserving model known as the Current Expected Credit Loss model, generally

referred to as CECL.

Adoption of CECL required the establishment of an allowance for the remaining expected lifetime credit losses on

the portion of the Company’s receivable portfolio that was originated prior to January 2018.

To comply with CECL, the Company recorded

an addition to its allowance for finance credit losses of $127.0 million.

In accordance with the rules for adopting CECL, the offset to

the addition to the allowance for finance credit losses was a tax affected reduction to retained earnings using the modified retrospective

For the year ended December 31, 2022, we recorded

a reduction to provision for credit losses on finance receivables in the amount of $28.1 million compared to $14.6 million in 2021.

reserve decreases were primarily due to improved credit performance for these receivables.

The allowance applies only to our finance receivables

originated through December 2017, which we refer to as our legacy portfolio.

For our receivables originated

prior to January 2018, we maintain an allowance for credit losses on automobile contracts held on our balance sheet, which reflects our

estimates of probable credit losses that can be reasonably estimated.

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.

The adjustments recorded to reduce provisions for credit losses in both

periods were primarily due to better than expected credit performance for these receivables.

The allowance applies only to our finance

receivables originated through December 2017, which we refer to as our legacy portfolio.

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.

Under the fair value method of accounting, we recognize interest income net of expected credit

Thus, no provision for credit loss expense is recorded for finance receivables measured at fair value.

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$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.

Occupancy expenses decreased

by $180,000 or 2.3%, to $7.5 million compared to $7.7 million in the previous year and represented 3.5% of total operating expenses.

Occupancy expenses were $5.6

million in 2024 which is down from $6.4 million in 2023.

Depreciation and amortization

expenses decreased by $57,000 or 3.4%, to $1.6 million compared to $1.7 million in the previous year and represented 0.8% of total operating

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.

In the prior period, our income tax

expense was $18.2 million, representing a 28% effective tax rate.

In the prior period, our income tax expense

was $15.6 million, also representing a 26% effective tax rate.

Liquidity and Capital Resources

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Page Eight Funding, LLC.

The facility provides for effective advances up to 82.0% of eligible finance receivables.

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 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.

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.

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.

On July 15, 2022, we renewed our two-year revolving credit agreement with Citibank, N.A., and doubled the capacity

from $100 million to $200 million.

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

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.

On November 1, 2024, we closed a revolving

credit agreement with Oaktree Capital Management, which was subordinate to the credit agreement with Citibank, N.A., and with a $25 million

credit capacity.

The addition of the subordinate Class B lender for this facility increased the effective advances up to 95.00% of eligible

finance receivables.

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 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.

13 unchanged sentences

from $100 million to $200

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.

At December 31, 2023 there was $69.0 million outstanding

under this facility.

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

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.

At December 31, 2024 there was

$145.6 million outstanding under this facility.

Capital Resources

48 unchanged sentences

At December 31, 2024 there was $50.0 million outstanding under this facility.

On March 22, 2024, we completed

a $50 million securitization of residual interests from previously issued securitizations.

In the transaction, a 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.

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%.

At December 31, 2024 there was $50.0 million outstanding

under this facility.

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

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

1 unchanged sentence

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.

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.

18 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 7. Management’s Discussion and Analysis