CPS earnings increased in the third quarter of 2026 as Consumer Portfolio Services reported record loan originations and improving credit performance. In its October 26 earnings discussion, the auto lender reported revenue of $131.9 million, up 22% from a year earlier, and net income of $7 million, up 42%.
Key Takeaways
- Quarterly originations reached a record $815 million as CPS expanded its sales force and dealer network.
- Delinquencies and annualized net charge-offs declined, but vehicle recoveries remained below historical levels.
- Interest expense and debt increased; management expects lighter fourth-quarter originations.
CPS earnings grow faster than revenue
Third-quarter pretax income rose 44% to $10.1 million. Earnings per share increased to $0.30 from $0.20, with Chief Financial Officer Danny Bharwani saying share repurchases helped the per-share result.
For the first nine months of 2026, revenue reached $365.6 million, up 12%. Net income totaled $18.7 million, compared with $14.3 million a year earlier, while earnings per share rose to $0.80 from $0.59.
Core operating expenses increased 21% to $51.3 million. However, those expenses remained flat at 4.5% of the managed portfolio for the quarter, indicating that the cost base grew broadly in line with the portfolio.
| Item | Details |
|---|---|
| Citibank warehouse facility | Increased from $335 million to $508 million. |
| Capital One warehouse facility | Increased from $390 million to $518 million. |
| Combined warehouse capacity | Exceeded $1 billion for the first time. |
Dealer expansion drives record lending volume
Originations rose 108.5% to $815 million from $391 million in the third quarter of 2025. Nine-month originations reached $2.11 billion, already exceeding the company’s previous full-year record.
President and Chief Operating Officer Michael Lavin attributed the growth to an expanded sales force and dealer network. Sales representatives increased from 93 at the end of 2025 to about 150, while the dealer base grew roughly 90% over 12 months to approximately 12,900.
Management said the expansion did not reflect looser underwriting. Lavin said approval rates fell from the low 50% range to the low 40% range over the preceding six months, even as quarterly applications reached 1.3 million.
Credit improves, but recoveries remain a constraint
Lavin said delinquencies over 30 days fell to 12.26% from 13.9% a year earlier. Annualized net charge-offs declined to 7.26% from 8.01%, with both measures improving year over year in each quarter of 2026.
Net recoveries on repossessed vehicles sold at wholesale auction increased to 32% from 28%. That remained below the historical average in the low 40% range.
The weaker 2022 and 2023 loan vintages still represented 14% of the portfolio. Lavin expects recoveries to improve as those loans run off; that remains a management expectation rather than a completed recovery.
Funding expands as borrowing costs rise
Chief Executive Charles Bradley said warehouse borrowing capacity exceeded $1 billion for the first time after increases to the Citibank and Capital One facilities. CPS also completed an $80 million residual financing during the quarter and used $60 million to repay a more expensive prior financing.
The company’s March 2026 quarterly filing listed warehouse lines of credit, residual interest financing and securitization trust debt among its liabilities. That earlier snapshot provides background on CPS’s funding structure, rather than verification of the third-quarter facility increases.
Third-quarter interest expense rose 19% to $70 million, while total debt increased 28% to $4.4 billion. Bradley said CPS had adjusted annual percentage rates and fees to maintain margins despite higher interest rates.
Management expects fourth-quarter originations to be lighter. That outlook is separate from the record volume already achieved in the third quarter.
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