Good afternoon. Hope you guys are having a nice conference. My name is Mike Lavin. I am the President, Chief Operating Officer, and the Chief Legal Officer of Consumer Portfolio Services. Our ticker symbol is CPSS. We're traded on Nasdaq. The primary focus of CPS is we are a publicly traded, independent, subprime auto lender. That's all we do. We lend from the near-prime space down through the subprime space. Things that we're sort of known well for in the industry is that we've been in business for 34 years. We've been through three recessions, many presidential administrations, bad credit years, good credit years. We've basically seen everything at CPS, and very few companies have been in this line of business for as long as we have. We're headquartered in Las Vegas, Nevada. We have operating call centers in California, obviously Nevada, Illinois, Florida, and Virginia.
We've got 950 employees. We have an extremely low turnover rate. Another thing that most investors like about CPS is the average tenure of our management team is 25 years. I'm actually one of the babies on the executive management team, and I've been there for 23 years. Most of the people reporting to me have been in this business a lot longer than me. They're great at their specific jobs. I'm sort of good at everything. Most investors love the long tenure of the management team. There's probably 30 of us on the executive management team. When you add up all of our years of experience, it's over 300 years of experience in strictly the subprime auto space. A lot of experience there. We have a $3.8 billion managed portfolio, which is an all-time record for CPS. It's never been bigger.
That managed portfolio consists of active, outstanding loan balances on their auto contracts. We do service our own paper. Our business model is we're a straight-up ABS issuer in the market. We do four securitizations every year. Quarterly, we work with Citigroup and Capital One that generally leads our deals. Basically, we're selling a quarter's worth of originations to bond investors, and then we retain servicing for a fee. We make money on the front end on interest. We make money on the back end on a servicing fee. With each securitized ABS deal that we do, we have a residual. That's really where the money's at. The residual is after all the investors have gotten their principal and interest back, there's money left over for us. That's what we call our residual income.
Amazingly, I do go to the ABS conferences, and we just hit our 104th ABS deal. I actually didn't think that was a big deal, but in talking to the ABS investors, their jaws dropped because that is just a consistent ABS issuer. One of my favorite things to say is in the 33 years and 104 ABS deals we've done, the investors have got their principal and interest back every single time. We are a solid ABS issuer. One of the things that we've sort of been doing is we've always been kind of known in the equity market as a value company, kind of like a turtle instead of a hare. However, coming out of COVID, we've kind of transitioned to a growth company. We've never originated over $1 billion in auto contracts a year before COVID.
We went, whatever, 28 years with doing $500 million a year, $900 million a year. Coming out of COVID, we really increased our originations. You can think of originations as sales as well. That is the dollar value of the auto contracts that we purchase from the dealers. In 2022, we did $1.85 billion, which was an all-time record for us in 34 years. We did tighten credit quite a bit from 2022 to 2023, but we still did $1.35 billion, which was obviously the second best year. Last year, we ramped it back up to $1.7 billion, which is something like a 25% increase year over year in sales. This year, we are targeting another 25% increase year over year in originations. With that, our revenues have grown as well. In 2022, we did $305 million in revenue.
In 2023, we did about $327 million in revenue. Last year, we did $363 million in revenue. One of the things that sort of stands out for CPS, and I know everybody claims this these days, but we really are technically a fintech. Nobody really knows us as a fintech in the industry because we've been in business for 34 years. The reality is we have the technicalities that these so-called new startup fintechs have, one of which is our use of machine learning and artificial intelligence in our modeling. The biggest piece of technology, quote unquote, that we have is our originations model. We use machine learning, decision tree, segmentation. We have a risk department of 10 data analytics. Every 18 months, we update what is known as our algorithm. We use machine learning to do that.
What that does is that takes a credit application, it pulls bureaus, it hits our algorithm, and it is able to give an approval or a decline within three seconds. That goes right back to the dealer. We can negotiate back and forth and purchase the contract. That is the biggest piece of technology that we have. That is the secret sauce. I have had many people approach me wanting to buy that secret sauce. Not for sale. That is how we make our money. We have filtered in other AI functions in our business. We have relationships with over 13,000 dealers in the country. We have contracts with over 13,000 dealers in the country. We have an algorithm that ranks these dealers A, B, C, and D, with D being worst. That algorithm looks at performance, tenure in our system, volume, look to book, return contracts.
There's all kinds of factors. And based on that algorithm and your grade, you can get credit concessions, less stipulations, it's easier to buy with us, et cetera, et cetera. That's a good piece of our technology. On the servicing side, we do have 500 what we'll call bill collectors. We've instituted a collections model for them, whereas six years ago, they used to come in and do whatever they wanted. Now the AI tells them who to call, when to call, how to contact them, text message them, email them, get them on the chatbot, et cetera, et cetera. That's helped our credit performance immensely. Like I said, our leadership team, we really have a triumvirate, a trio of us kind of run the company. Our CEO has been with us for 33 years. He's essentially the founder.
He's a big picture guy, a visionary, works with our Wall Street bankers a lot. There's me. I've been there for like 22, 24 years, I guess. I'm losing track. I run the day-to-day operations of the company. If you like lawyers running your business or CEOs a lawyer, I'm a lawyer. We do look at things very analytically, which is unique for the industry. The CFO has been there for 28 years. Moving on, what's the subprime market? It's pretty big. According to, who is it? I think it's TransUnion. The outstandings for auto finance outstandings is $1.5 trillion as of the end of March 2025. They estimate that about 15% of the outstandings are subprime. Subprime generally is defined as anything from 580 FICO on downward. I mean, some people buy at 450 FICO.
What's interesting about the subprime business is it's really not that competitive. There's only about six or seven of us that are big nationally. The rest is very, very segmented, maybe some credit unions, maybe some mom-and-pop shops, maybe some buy here, pay here. There really only is six or seven competitors, which is weird because most businesses that you might talk to today is, "Oh, it's so competitive. It's so competitive." Ours isn't. It's weird. We're probably around the six range in market share for competition. Probably the biggest reason why it's not competitive is there's a high barrier to entry into the business. It's capital intensive. It's highly regulated. Probably the most important thing is I mentioned that we have contracts with 13,000 dealers. It's literally taken us 34 years to come up with those 13,000, what we call clients.
The dealers are our clients. To start an auto subprime company from scratch is nearly impossible. I've had offers to do it, and I'm just not doing it. It would ruin my life. It's just a really good business to be in. A lot of business for everybody. It's not cutthroat. We're not really beating each other on fees and rates. We're actually competing on who has the best customer service, who has the best ease of use to work with, i.e., who has the less stipulations. Certainly, there's enough business for everyone. In fact, one of our big partners is Ally, and we get a lot of Ally turndowns for subprime. All six of our competitors are on the Ally platform, and there's enough business for everyone, which is totally bizarre. Here's our programs.
Really, really nothing of note, but our originations characteristics are interesting. Our average LTV is right around 119%. That's pretty good. A lot of our competitors run at 125%-130%. The loan to value at 119% sounds big, but in our mathematical calculation, that's right where we need to be to make money. The payment to income, the only thing that's interesting about this graph from September 18th through March is it's very steady. That is a big part of our secret sauce, is payment to income and debt to income. As long as these graphs are steady, that means we're keeping our credit criteria very conservative and safe. It is very steady. Our FICO for us is 574. Some people are right around 590. Like I said, some people go crazy into the 450-500 ranges. We're more of a conservative subprime lender.
Last year, we did $1.7 billion. If we felt like it, we could do $3 billion if we really wanted to. For us, our approval percentage on the applications is 48%. We are being very, very selective. That goes to our ABS investors love to hear that. Our equity investors love to hear that. Our APR is a whopping 20.3%. I do not have any friends and family wanting to get a loan from us. One thing that is interesting about the APR is in 2022, it was 17%. We were getting 10,000 applications a day for subprime auto. Today, we have been able to raise the rate from 17% to 20%, and the demand is higher. We are getting 13,000 applications a day today with a 48% approval ratio. The supply is massive in subprime auto. Not a lot of competition.
We're being very picky with a 48% approval rate. We're originating exactly what we want, which is about a 20-30% growth rate year over year. Anything else above that, you might get into trouble with some credit performance. All right. We've sort of already talked about this. Again, one of the things that sets us apart is we've got 13,000 contracts with dealers, strong demand. What's our customer look like? Surprisingly, the subprime customer is pretty solid. Forty-one years old, seven or eight years of credit history, seven years length of residence, $74,000 in household income. I mean, that's fairly strong. That's a little bit better than the average Joe. Our profile is a little bit stronger within the subprime space. When I say our approval percentage is only 48%, that's because we're actually targeting the top third of the subprime space.
There's a couple of risks to the auto subprime business that our team is very well aware of. One is unemployment rate, and the other is if there's going to be a recession. Those are really the two silver bullets that put a hurt into the business. Now, the Department of Labor has said, "I think we're at 4.4% unemployment rate." That's pretty good. They're actually thinking it's only going to drop to 4.6% through 2026. That looks pretty good. Of course, the last week has been a little sketchy with uncertainty and throwing darts with tariffs. It's unpredictable. Whenever I see recession, that's a little scary. I will tell you, what's interesting is we code the jobs of all of our customers.
What we find is the subprime customer is extremely resilient, more resilient than probably most of us in here who are prime customers, white-collar people. We need a car for work, but we might have two or three cars. These people need a car to get to work, to pay their bills. They live paycheck to paycheck. Oh, by the way, most of them are service industry workers. It is easier to find a job if you lose a job as a service industry worker than as an investment banker. We take some headway with that. What are we financing? Most is used cars, 90% used cars, 10% new cars. We do give deals on certified pre-owned cars, get a little bit better treatment. Interestingly, for us, there are two types of dealerships.
There's a franchise dealership and a non-franchise dealership, a franchise dealership being Mike Lavin Ford and an independent being Mike Lavin's used cars on the sidelot there on the street. We target the franchise dealers mostly. We found that the paper performs better from the franchise dealers, and there's less fraud. We've been doing that for 34 years, and that's one of the main reasons why we're still in business. Credit performance has been sort of a big issue the last three or four years coming out of COVID. 2022 was rough for the industry. In fact, maybe the second or third worst credit-performing year that we've seen in our history. A lot of macroeconomic things in play. That's not to blame things that we don't control, but it is what it is. Now, what we've seen, though, is vast improvement. The second half of 2023 has been performing better.
We just finished our analysis. You want to wait about 14-15 months for the loans to be on the books to evaluate the performance. We just finished our analysis of 2024A, and it's doing quite well. What we're seeing is the second half of 2023, all the way through 2024, each vintage of originations is performing better and better and better and better. That goes along with we track defaults. That's a very important metric in our business. The quarterly defaults are going down quarter after quarter after quarter 2023 into 2024. A couple of financial things of note. Sort of the return on assets, sort of golden figure for our business, at least what I've been told, is anywhere between 3%-4% of our portfolio.
In 2022, I think we were at five or six, but that was clearly COVID at work with the government. Basically, the government gave CPS money because they gave our customers money, and then they paid their debt really fast. That pumped up our income, our net interest margin, our return on assets. There are probably like six or seven levers that we use to control the ROA. Obviously, the first one is the APR, and we're holding strong there. The second one is our cost of funds. It's what it costs for us to get the money to then loan the money. That is strictly controlled by the ABS market. Unfortunately for us, the only thing we can control in the ABS market is when we go to the ABS market. The markets are what the markets. We do negotiate.
Most of our deals are oversubscribed in the ABS market, but what we've seen the last year has been tough. We've gone from 3.5% cost of funds up to 8% cost of funds a year ago. I think our last deal, we finished off at right around 5.88% cost of funds. That affects our ROA as well. Of course, OpEx is a big deal in our business. We've been driving it down from roughly 6.5% a couple of years ago, and that's a percentage of the average portfolio size, down to 5.35% now. Okay. A couple of other final financial things. We've got a strong balance sheet. We're rich in cash. I did talk about the residual and the securitizations. It's kind of the hidden asset that CPS has. That is the money in all the quarterly ABS deals that we have.
We estimate that we have about $450 million coming out of those pools over the next two to three years. Interestingly enough, if you liquidated the company tomorrow, that hidden asset is worth $18 a share. Right now, we're trading at an unfortunate $8.70 a share. I think a year ago, we were at $13 a share. The book value is roughly $13 a share. Yeah, we're a publicly traded company that's been in business for 34 years with good revenue. We've posted 54 straight profitable quarters with a book value of $13, and we trade for $8.50. You go figure. I don't know. Other than that, I think that's probably all the material stuff that I have. Any questions? Yes. [audio distortion] 2008 and 2009, we shut originations down for six months.
We delayed our securitization for 10 months, and we survived. We were one of the only companies during that time that survived. All of our investors got their P&I back. Quite well. [audio distortion] . There was like, no, there was like maybe 15 at the time. We were one of maybe one or two that survived. Those six or seven started up after the Great Recession. [audio distortion] I mean, it wasn't me. I have to give our CEO credit. He kind of foresaw the recession based on his experience. Remember, we've been through a couple before, so he had experience with it.
We kind of got ahead of it and stopped originating the paper, delayed the securitization. We had a couple of other financial tricks up our sleeve. Then did the plan. I wish I was the leader, but I wasn't. [audio distortion] I think we deliberately changed our strategy. I think we saw that the market share was there to attack. A lot of our competitors, or some of our competitors that sit right on top of us, were doing poorly to the extent that they were hemorrhaging a little bit. We kind of decided to put our foot on the throat a little bit. I think, I mean, just the opportunity was there, and the market, the demand was there.
You have to have the demand, and there was low supply. We took advantage of that, and we increased our APR the entire time. It was almost like a perfect storm. I mean, it's not in our nature to be an uber growth company. We're more strategic and surgical with how we do it, which I think is why we've been in business for so long. Yes. [audio distortion] The last 10 years' growth rate is, I can tell you that the last four have been well above 10%, but I think going back 10 years, you're going to see super conservative growth rate, maybe 5%-ish year over year. Very tepid. [audio distortion] Yeah. We did $1.7 billion last year. We're projected to do $1.95 billion this year, which again would be a record.
Based on the first quarter, we're there. Based on the demand for our product, we're there. It's just a matter of executing. I think going forward with sort of our new strategy, we're looking at 20%-25% growth year over year going forward, as much as we can financially handle. We're not owned by a hedge fund or private equity firm. We're not sitting on a mountain of gold. We're kind of self-funded. We do have to be careful with our cash burn. Yes. [audio distortion] I don't know. I wish I knew. I think, I mean, you guys can all type in CPSS and see that we're very thinly traded, low volume.
I think that might be one of the bigger weaknesses. Otherwise, it's just getting the story out there. I think our story has improved over the last five years versus the prior 25 years. I mean, if you could tell me, I'd love to know. We have. We have, actually. I think our CEO is hesitant to take on the debt that would be required to take the company private. You're talking about, I think, $70 million or $80 million it would take us to buy out the shares and go private. I think we're better off as a public company and showing growth and giving shareholder value that way. Hold on a second. I'll get you in a second. [audio distortion] For us, it's about 13%. Very low in sales.
The collectors, of course, are right about 23%. Nobody leaves in management. It's like the mafia. Nobody leaves. Yeah, pretty low. Yeah. [audio distortion] Yeah. We have no marketing budget. We don't have to. There's no money spent on identifying customers. Our budget is to just enhance our relationships with those dealers. The customer goes in, buys a car, goes into the back office. The application comes to us, goes back to the dealer, and they're like, "Here's your financing." The customer doesn't have a choice. It's whatever deal the dealer gets to get them the most profit and the customer the lowest payment. It's pretty cool. We have no marketing budget. Yes, sir.
Any of your customers, do they do Uber or Lyft? Is it possible if they lose a job, can they sustain the interest payments?
Yeah. We do have what's called a gig program. It's very lightly used. We don't have a lot of gig customers, but we do it. Yeah. Anything else? All right. Thanks, guys, for coming. Appreciate it.