All right. Our next presenting company is Consumer Portfolio Services, traded on NASDAQ under the ticker symbol CPSS. Consumer Portfolio Services is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems, low income, or limited credit histories. CPS partners with dealerships across the U.S., purchasing and servicing auto loans in a way that broadens access to vehicle ownership while maintaining disciplined credit and portfolio management. Here to tell you more about the company is President and COO, Mike Lavin. Mike.
Thanks, Alec. Thanks for being here. I've done these things with full houses. I've done it with three people in there, but this is okay. Come by Table 39 if you have any questions after this. But like Alec said, we are a subprime auto finance company. Something unique for CPS is we've been in business for 34 years, which means we're the longest-running subprime auto finance here in the space. We're headquartered in Las Vegas. We've got 1,000 employees. We've got three or four call centers spread out across the country. One of the things that comes with having longevity in the industry is that we've got contracts with 13,000 auto dealers across the country. 85% of those auto dealers are franchise dealers, like Mike Lavin Ford, and about 15% of those are independent dealers, which is Mike Lavin's used car on the dirt lot on the corner.
We are consistently profitable, posting 55 straight profitable quarters, so going back to 2014, we've remained profitable through thick and thin. Our auto portfolio, as it stands now, our AUM, or assets under management, is $3.9 billion, which is an all-time record in our 34-year history, and let's see. Oh, shoot. Let's do the deck. I don't like to go with decks, but this is our first one, so anyway, it's 55 straight profitable quarters, $3.9 billion under asset management. We're growing the portfolio at a 17% clip year- over- year. One of the big drivers in our business is we're a regular issuer in the asset-backed security market. In fact, over the 34 years we've been in business, we've done 105 deals, ABS deals. We do four a year on a quarterly basis. I never really realized how many ABS deals that was.
I went to the ABS West Conference in February and had a couple of bankers' jaws drop on the floor when I said we've done 105. But yeah, we utilize the ABS market to fund our originations. One interesting thing about CPS is there's probably six or seven competitors in the marketplace that do business on a national scale. Out of all of those competitors, we're the only one that's really self-funded. So we're not owned by a private equity firm. We're not owned by a hedge fund, insurance company, whatever. I think we're a very attractive takeout company for the PE market right now. And I know our competitors are owned by that. What that means is we don't have a war chest of cash to stick our hands in to fund our business going forward.
So what we make, we pile drive back into the business to fuel growth. That's a little unique in the industry. Another thing that's unique about CPS is the average tenure of our management team is 25 years. In fact, the average tenure of our management team is longer than a lot of our competitors have been in business for. In fact, the management team's been together for so long, and there hasn't really been a liquidity event. We've ended up owning about 48% of the total outstanding shares of CPS, which is somewhat unique because now you have an executive management team that's been together for a long, long time, and we all have skin in the game.
So I go to work every day with an adrenaline rush to push things forward because I've got a ton of skin in the game at this company, and I've been there for 24 years. One of the advantages that we have is our technology advantage. We've been kind of a fintech for the last decade. So before the fintech name went viral, we're sort of an originator of the fintech stuff. And really, when you look at subprime auto, it all boils down to your credit algorithm. Can you evaluate a credit bureau? Can you evaluate the customer? Can you risk-based price that customer within a matter of seconds? And being in business for so long, we've had access to customer data for 34 years, and we've accessed that data through SaaS software and machine learning to drive what we think is the best credit algorithm in the industry.
We update that algorithm about every 18 months with fresh data, and that's allowing us to buy more reliable loans. We've expanded our use of AI into the front end of our business, where the artificial intelligence is reading the dealer packages and pre-populating our proprietary loan origination system. We've also incorporated AI agents into CPS as of three months ago. I'm only aware of three of our competitors using AI agents in our business. One of the big underwriting tools we have is what's called a Welcome Call. And that's where we call the customer and verify the, "You got a Camry? It's gray. It has 50,000 miles on it," etc., etc. Well, now we have the AI do those Welcome Calls. Not only is it more accurate, it's quicker, and we're bypassing the processors.
On the collection side of the business, we have AI basically going into the customer behaviors of how they pay their bills. And so every day that a collector comes in and logs on to our proprietary system, the AI tells the agent who to call, when to call, and how to call them. So basically, they're logging in. They're saying, "I'm going to collect Luke's account." And the AI says, or the customer behavior says, "Call them after 3 o'clock at work. Don't text them after 7 o'clock because they'll never answer." So we've got the AI dialing into the customer behaviors for each of our 250,000 active accounts. And like I said, the other thing that we've done is we put in the AI agents two months ago, and we're letting them do outbound calls on an auto dialer.
And we're only letting them collect on our easy accounts. And what that's allowed us to do is take some of the better domestic collectors that we have and put them on the harder accounts. So for example, I was reading some data in last month because we had the AI bots going, we were actually able to go from 5,000 manual texts to 15,000 manual texts by our collectors because now they don't have to do the outbound calls on the dialer. So it's allowing us to stack our collection activities day- after- day. The total addressable market in auto finance is huge. It's $1.6 trillion as of the end of the 1st quarter, according to Experian. Subprime is 16% of that $1.6 trillion. And like I said, not a very competitive industry. There's only six to seven competitors. There's enough business to go around.
In fact, we're getting 11,000 applications per day. And our approval rate is only 45%. So we're kind of cherry-picking the best subprime customers in the market. And guess what? Our competitors are cherry-picking as well because there's enough business for everyone. So in this business, there's more demand than there is supply of the financing product. And so that's quite unique for the business. The other thing that's unique is there's a high barrier to entry. And there's a couple of reasons. One is it's highly regulated. So if you're going to go into this business as a startup, you better come in with an army of lawyers. Number two, it's very capital intensive. So we're setting origination records year over year, but we're self-funded. So we're kind of on the edge, liquidity-wise, quarter- over- quarter. Most startups can't handle that.
And the third, which is probably the biggest barrier to entry, is like I said, we have those dealer contracts with 13,000 dealers. It takes years and years and years to get those relationships in the auto business. The auto business is still sort of relationship-based. Believe it or not, it's kind of an old-school business. And so for a startup to come in and disrupt the industry and think that they can get even 1,000 relationships going with dealers, even within two years, is impossible. I've been asked a few times to spin off and do a couple of startups myself, and I just refuse to do it. It's just an impossible task. And I don't remember the last time I saw a startup in our space. So that's pretty good. Our customer is surprisingly good.
The difference in our algorithm is that we kind of look for the subprime customer that has a lower FICO, like sort of 565 - 580, that is, in the moment, a subprime customer, but really, truly, over the long haul, isn't a subprime customer. So maybe they went through a divorce. Maybe they've got some medical bills with something that happened over the last six months. Maybe, who knows, maybe they've got some one-time student loans, whatever. Our model tells us that they're actually a near-prime customer or a prime customer, but we're going to price them as a subprime customer. So they're making, I think, what is it, $73,000, $75,000, 23% own homes, 41 years old, five years average job time. That's a pretty solid customer.
So there are certainly other companies out there that aren't in our space that are going deep, deep, deep subprime, and that's not where we live. We're going to skip that one. Turning to sort of our origination trends. Coming out of COVID, we never, ever in our 34-year history did an originations month or a year over $1 billion. But in fact, coming out of COVID, we've gone over $1 billion every year. We came out in 2022 and did $1.85 billion. In 2023, we kind of tightened credit a little bit. 2022 was a bit of a tough year with macroeconomic headwinds. But we still did $1.35 billion, which was still our second-best year in our history. We ramped it back up to $1.6 billion last year. And this year, we're sort of tracking for a 10%-ish growth rate. We were supposed to do about 30% this year.
We've kind of dialed it back because interest rates are so high, inflation's high. I think there's some strains on the customer, so we're kind of taking it easy. But we'll still have a 10% growth year- over- year, roughly $1.75 billion this year. So we definitely sort of went from sort of a turtle in the industry to more of a hare coming out of COVID, more of a sort of a semi-growth company instead of a long-term value company. And with that growth has come an increase in revenues. As you can see, we've sort of gone from $266 million in 2021 up to $363 million last year. And this year, we're tracking to go over $400 million in the first time in our company history. Now, with that being said, we have seen our profits shrink a little bit quarter- over- quarter and year- over- year.
That's strictly due to the interest expense that we're experiencing in the marketplace. Remember, we lend money at 20%, and we borrow money at, say, 6%. After keeping the lights on and accounting for our losses, the difference is our net yield. Right now, historically, we're borrowing money at 3%-4% in our ABS transactions. Lately, at least in the last year, it's been between 8% and 6%. Our net yield has naturally gone down. The profit's taken a little bit of a hit. One thing we have been able to do with the AI that I talked about and what we've learned over the years and coming out of COVID is we've been able to drive our operating expenses down, which is big for us and big for our bottom line and our net yield.
In the past year, we've driven our OpEx down from 6% to below 5%, which is, again, the first time in our history we're setting company records. For the first time in our history, we got it under 5%, and that's been able to allow us to increase our net yield by 100 basis points, so the AI is very much helping there. I guess it's just a sign of the times. Lots of companies' OpEx is going down because if they're using AI, and that's no different for us, so looking at our net interest margin, which at least our investors care about and we care about deeply, the golden number that at least I've been told in the industry is 3%-4% net yield at the end of the day. We kind of struggled a little bit in 2024 with a 1.2% net yield.
And you can see one of the reasons is the cost of funds was above six, which is historically high. And you can also see that our OpEx was 5.6%, and our losses were a little high as well. But coming into this year, at least for halfway through the year, we're still holding our APR at 20%. We've been able to lower our OpEx, and our portfolio is performing better, so we're lowering our losses. We do expect to get over three by the end of the year, which will make 2025 a pretty good year. I also talked about what we've learned in those 34 years. We've learned to do more with less. And the orange line marks what does the orange line mark? The orange line marks our total managed portfolio, and the blue bars mark our total employee headcount.
So you can see as the orange, as we're growing the portfolio, we're not really growing the blue bars. So this, along with AI, is allowing us to lower our OpEx. So historically, we were okay at OpEx, but you can see we've really turned the corner in the last few years. Sort of going to some of our financials, the balance sheet. The balance sheet's looking pretty good these days. A couple of things of note. Our shareholder equity just reached over $300 million, which is the first time again. The first time in our history, we've gotten over $300 million. That's the highest shareholder value that we've ever gotten. You can see that our restricted cash is pretty high, so we're sitting on a decent amount of cash.
The warehouse lines of credit are a little bit lower, but you can also see that our interest expense has gone up by quite a bit, and that's what's sort of hurting our profitability, and then sort of looking at our ABS transactions and what I call the credit enhancement, what I really call the hidden asset of the company is our credit enhancement, which is a fancy way of saying it's our residual, so with every ABS deal, we get an equity piece of those collections, and so after we pay each investor back their principal and interest, whatever's left comes to us, and so it takes about six to seven years for those residuals to pay out over time, and we have around 16 outstanding ABS transactions.
And when you add all those up, we're sitting on $400 million in cash at the end of the day. And when you think about it, it really is a hidden asset. And I tell my wife all the time when she freaks out when the company's not doing good, I'm like, "Hold on. We're sitting on $400 million in cash. And if we stopped originating tomorrow and we ran the portfolio off, we would literally run off $400 million." And when you think about the shares outstanding, that's roughly about $16 a share, $17 a share in liquidity value.
Considering the fact that our book value is $13.50 right now and considering the fact that our stock has completely crashed the last week and we're trading for, I don't even know, $7.25 as of 20 minutes ago, and I'm not looking at my account right now because we've gotten hammered the last week. But we're trading for half of book, and we're sitting on a $400 million asset. There's a lot of upside in CPS. Sort of some final thoughts. We're in a good spot as a company. We're very well capitalized. Our shareholder equity is at an all-time high. Our originations are at an all-time high. Our revenues are growing at an all-time high. Once we get rid of the interest expense, we're sort of relying on the Fed rates to go down.
If we can get back to that 3%-4% borrowing cost, we'll get the interest expense down and the profitability up. And we've also driven down our OpEx. We're really in a good spot going forward. Now, of course, I don't control the public markets. I control the message. We are thinly traded, which is an issue. We have a small float, and we're trying to get over those hurdles going forward. So with that, any questions from the massive audience? Can I?
Yeah.
Sorry.
Oh, sorry.
I'm just curious. I mean, I think there's debate as to where the consumer is today, but let's just assume that they're under stress and increasing stress, particularly in the sort of subprime end of things. So given your longevity, how does that play out for you business-wise, one? And then two, have you ever taken advantage of larger pools of loans that might become available under that scenario?
Yeah. So to answer your first question, we kind of rely on our experience to pull back our credit when we see the macro headwinds. So we've been through, I think, three or four cycles in our 34 years. And so we know when to pull back, and we know when to go forward. So coming out of 2022, we pulled back from $1.8 billion- $1.3 billion. So we basically tighten our credit. We go into the credit algorithm, and we say, instead of three months in a job, you got to be in a job for nine months. And instead of being in your current residence for six months, you got to be in your residence for a year. So we make all those kinds of changes, and that brings our originations down $500 million.
Now, this year, I agree with you, the customer is constrained and under pressure, and so what we've done is we were supposed to grow 30%-40% this year. We were going to crack $2 billion for the first time ever, but we've pared it way back, and we're only looking at, like I said, a 5%-10% growth year- over- year, so we do lean on the experience to pull back. That's the lever that we have is that algorithm, and it's as easy as me walking across the building into the senior VP of risk and say, "Hey, man, we got to pull back, come up with five things," and then we can run scenarios in our software to figure out how that's going to tighten it up.
And then the other question is, yeah, I mean, when I mean, there's not a lot of players out there in the space. So portfolios of distressed, like a distressed portfolio doesn't come available very often. But when it does, sometimes we are a bidder. Sometimes big banks like Fortress and Ares, who we have relationships with, will say, "Okay, we want to buy the portfolio. We need you to service it, and we'll give you an equity piece." We do bid on portfolios with that kind of structure. We can't afford to buy those portfolios ourselves. In fact, if we could, we wouldn't do it. We would pile drive it into our own originations because we want to rely on our proprietary algorithm and not something that's sort of distressed. But we do.
We've done, I think we've bought four portfolios in our history, but we haven't bought one in over a decade. So that's kind of where we're at.
Mike, maybe to double-click on a topic that you covered well, but your dealer relationships kind of give us the obviously 30-plus years of operating history. Where do you see advantages in more of a consolidated market? What feedback have they had recently as kind of a broad topic on how you're managing retention with the dealers, and yeah, I guess we'll just start there.
Yeah. I mean, we have 13,000 dealers, but realistically, 8,000 of those 13,000 send us applications on any given month, and out of those 8,000, we're really only funding with 2,000, and we can get into the data and figure out who our best dealers are, and when we combined who's giving us the volume, and then we track the portfolio of business that they're giving us in terms of losses, we hone in on those better dealers. In fact, we have a proprietary AI product that rates the dealers A, B, C, and D, with A dealers getting incentives like management fees or instead of five stipulations, "Give us five documents," we'll say, "Just give us the proof of income," all the way down to the D, where they have to give us everything and anything to get the loan done.
We're kind of relying on sort of our ranking system and our AI to hone in on our marketing efforts. I don't know if that addresses your question. Then the other thing that we've been doing, at least for the last three years, is we put an emphasis on large dealer groups. A large dealer group is any auto dealership with more than 10 dealerships under their umbrella. We've really attacked those dealerships across the country, and we've actually raised the percentage of our originations from 16% large dealer groups to 29%. So we think that that's a good sort of sweet spot to be in. You don't want to have all your eggs in one basket with large dealer groups because they do get management fees. But on the other hand, it was a good source of organic business for us as well.
Instead of having to hire 10 marketing reps, we just have one rep go to three large dealer groups, and we're getting more deals from that one dealer than opening up three territories. So it's worked out well. Yes, sir?
So back on the last question I asked. So what has been the range of your net loss percentage in troubled times, one and then two, with the, I think you said 2,000, we'll call them active monthly dealers that you're doing business with? Do they typically have you as a sole source? Or if you don't pick up the financing, they've got Joe and Mike and whomever else as a third and fourth financing option?
Yeah. So our cumulative net losses are historically around 15%. During 2022 and 2023 vintages, they went up to about 21%. Right now, we think we're originating towards a 17% CNL. So we're still a little bit above historicals. I don't even know if we'll ever get back down to 14% or 15%, but we're certainly not at 20% or 21%, which we were a few years ago. And generally speaking, I have access to all the data of our competitors and how they're performing. We're all kind of about in the same boat, although I will tell you we do beat them on net loss performance, and that's only because we're stricter. If we wanted to get an $8 billion portfolio, we could probably do it in two years if we felt like it, but we're not willing to have a 25% net loss.
We're just not that big enough. And then the answer to your other question is, yeah, I mean, if they don't get financing from us, there are three or four others that are willing to do it. Now, is their APR going to be the same? Is their fee going to be the same? Is the term of the loan going to be the same? I'm not sure. They're probably different because everybody has their own secret sauce algorithm, so everybody prices it different. And it's up to the dealer to pick. They'll pick the lender based on how much profit they can get at the time the transaction closes. That's it. That's all they care about. Sometimes personal relationships can come into play, but rarely. They're really just going for dealer profitability.
And at the end of the day, the only thing that could trump that is we fund within two days, but some of our competitors take two weeks. And that's tough on their floorplan lending and their cash flow. So sometimes we can get away with a bigger fee and an APR because we fund so fast. So there are some advantages there too.
Yeah. I mean, I think it would just be a trade-off between origination velocity, and I mean, I presume we're not talking about huge differences in profitability depending upon what lender you're dealing with, right? I mean.
Hundreds of dollars.
Yeah. Right. So you just want to create more transactions as opposed to worrying about $100 on a particular transaction.
Yeah. Right, and that's why we can survive because we're not the best priced. We're not the best term, but we fund the fastest, and we have great customer service, and we're always the path of least resistance, and that's what they like.
This presentation has now finished.