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Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2025
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | (1) Summary of Significant Accounting Policies Description of Business We were formed in California on March 8, 1991. We specialize in purchasing and servicing retail automobile installment sale contracts (“automobile contracts” or “finance receivables”) originated by licensed motor vehicle dealers located throughout the United States (“dealers”) in the sale of new and used automobiles, light trucks and passenger vans. Through our purchases, we provide indirect financing to dealer customers for borrowers with limited credit histories or past credit problems (“sub-prime customers”). We serve as an alternative source of financing for dealers, allowing sales to customers who otherwise might not be able to obtain financing. In addition to purchasing installment purchase contracts directly from dealers, we have also (i) lent money directly to consumers for loans secured by vehicles, (ii) purchased immaterial amounts of vehicle purchase money loans from non-affiliated lenders, and (iii) acquired installment purchase contracts in four merger and acquisition transactions. In this report, we refer to all of such contracts and loans as "automobile contracts." Basis of Presentation Our Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, with the instructions to Form 10-Q and with Article 10 of Regulation S-X of the Securities and Exchange Commission, and include all adjustments that are, in management’s opinion, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. Results for the nine-month period ended September 30, 2025 are not necessarily indicative of the operating results to be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these Unaudited Condensed Consolidated Financial Statements. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Finance Receivables Measured at Fair Value Effective January 1, 2018, we adopted the fair value method of accounting for finance receivables acquired on or after that date. For each finance receivable acquired after 2017, we consider the price paid on the purchase date as the fair value for such receivable. We estimate the cash to be received in the future with respect to such receivables, based on our experience with similar receivables acquired in the past. We then compute the internal rate of return that results in the present value of those estimated cash receipts being equal to the purchase date fair value. Thereafter, we recognize interest income on such receivables on a level yield basis using that internal rate of return as the applicable interest rate. Cash received with respect to such receivables is applied first against such interest income, and then to reduce the recorded value of the receivables. We re-evaluate the fair value of such receivables at the close of each measurement period. If the reevaluation were to yield a value materially different from the recorded value, an adjustment would be required. Anticipated credit losses are included in our estimation of cash to be received with respect to receivables. In accordance with the fair value accounting standards, credit losses are included in our computation of the appropriate level yield, therefore we do not thereafter make periodic provision for credit losses, as our best estimate of the lifetime aggregate of credit losses is included in that initial computation. Also, because we include anticipated credit losses in our computation of the level yield, the computed level yield is materially lower than the average contractual rate applicable to the receivables. Because our initial recorded value is fixed as the price we pay for the receivable, rather than the contractual principal balance, we do not record acquisition fees as an amortizing asset related to the receivables, nor do we capitalize costs of acquiring the receivables. Rather we recognize the costs of acquisition as expenses in the period incurred. Other Income The following table presents the primary components of Other Income for the three-month and nine-month periods ending September 30, 2025, and 2024:
Schedule of other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | September 30,
|  | 2025 |  | 2024 |  | 2025 |  | 2024
|  | (In thousands) |  | (In thousands)
Origination and servicing fees from third party receivables |  | $ | 1,248 |  |  | $ | 1,647 |  |  | $ | 4,063 |  |  | $ | 5,485 |
Sales tax refunds |  |  | – |  |  |  | 254 |  |  |  | – |  |  |  | 803 |
Other |  |  | 7 |  |  |  | 21 |  |  |  | 35 |  |  |  | 103 |
Other income for the period |  | $ | 1,255 |  |  | $ | 1,922 |  |  | $ | 4,098 |  |  | $ | 6,391 |
Leases The Company has operating leases for corporate offices, equipment, software and hardware. The Company has entered into operating leases for the majority of its real estate locations, primarily office space. These leases are generally for periods of three to seven years with various renewal options. The depreciable life of leased assets is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term. The following table presents the supplemental balance sheet information related to leases:
Schedule of supplemental balance sheet information related to leases |  |  |  |  |  |  |  |
|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
|  | (In thousands) |
Operating Leases |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  | $ | 51,770 |  |  | $ | 51,093 |
Less: Accumulated amortization right-of-use assets |  |  | (35,055 | ) |  |  | (31,644 | )
Operating lease right-of-use assets, net |  | $ | 16,715 |  |  | $ | 19,449 |
Operating lease liabilities |  | $ | (18,748 | ) |  | $ | (21,471 | )
Finance Leases |  |  |  |  |  |  |  |
Property and equipment, at cost |  | $ | 4,039 |  |  | $ | 3,794 |
Less: Accumulated depreciation |  |  | (3,635 | ) |  |  | (3,488 | )
Property and equipment, net |  | $ | 404 |  |  | $ | 306 |
Finance lease liabilities |  | $ | (418 | ) |  | $ | (315 | )
Weighted Average Discount Rate |  |  |  |  |  |  |  |
Operating lease |  |  | 5.0% |  |  |  | 5.0% |
Finance lease |  |  | 6.4% |  |  |  | 6.5% |
Maturities of lease liabilities were as follows:
Schedule of maturities of lease liabilities |  |  |  |  |  |  |  |
(In thousands) |  | Operating |  |  | Finance |
Year Ending December 31, |  | Lease |  |  | Lease |
2025 (excluding the nine months ended September 30, 2025) |  | $ | 938 |  |  | $ | 52 |
2026 |  |  | 5,084 |  |  |  | 207 |
2027 |  |  | 5,242 |  |  |  | 149 |
2028 |  |  | 5,408 |  |  |  | 30 |
2029 |  |  | 3,761 |  |  |  | 10 |
Thereafter |  |  | 985 |  |  |  | – |
Total undiscounted lease payments |  |  | 21,418 |  |  |  | 448 |
Less amounts representing interest |  |  | (2,670 | ) |  |  | (30 | )
Lease Liability |  | $ | 18,748 |  |  | $ | 418 |
The following table presents the lease expense included in General and administrative and Occupancy expense on our Unaudited Condensed Consolidated Statement of Operations:
Schedule of lease cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
|  | (In thousands) |  |  | (In thousands) |
Operating lease cost |  | $ | 1,126 |  |  | $ | 1,311 |  |  | $ | 3,748 |  |  | $ | 3,996 |
Finance lease cost |  |  | 55 |  |  |  | 34 |  |  |  | 164 |  |  |  | 82 |
Total lease cost |  | $ | 1,181 |  |  | $ | 1,345 |  |  | $ | 3,912 |  |  | $ | 4,078 |
The following table presents the supplemental cash flow information related to leases:
Schedule of supplemental cash flow information related to leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Cash paid for amounts included in the measurement of lease liabilities: |  | (In thousands) |  |  | (In thousands) |
Operating cash flows from operating leases |  | $ | 1,126 |  |  | $ | 1,311 |  |  | $ | 3,748 |  |  | $ | 3,996 |
Operating cash flows from finance leases |  |  | 48 |  |  |  | 29 |  |  |  | 142 |  |  |  | 70 |
Financing cash flows from finance leases |  |  | 7 |  |  |  | 6 |  |  |  | 22 |  |  |  | 13 |
Stock-based Compensation We recognize compensation costs in the financial statements for all share-based payments based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. For the three and nine months ended September 30, 2025, we recorded stock-based compensation costs in the amount of $500,000 and $1.9 million, respectively. These stock-based compensation costs were $727,000 and $2.4 million for the three and nine months ended September 30, 2024. As of September 30, 2025, unrecognized stock-based compensation costs to be recognized over future periods equaled $6.0 million. This amount will be recognized as expense over a weighted-average period of 3.47 years. The following represents stock option activity for the nine months ended September 30, 2025:
Schedule of stock option activity |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Weighted
|  | Number of |  |  | Weighted |  |  | Average
|  | Shares |  |  | Average |  |  | Remaining
|  | (in thousands) |  |  | Exercise Price |  |  | Contractual Term
Options outstanding at the beginning of period |  |  | 6,157 |  |  | $ | 5.37 |  |  | N/A
Granted |  |  | 1,430 |  |  |  | 8.19 |  |  | N/A
Exercised |  |  | (1,352 | ) |  |  | 3.48 |  |  | N/A
Forfeited |  |  | (7 | ) |  |  | 4.95 |  |  | N/A
Options outstanding at the end of period |  |  | 6,228 |  |  | $ | 6.43 |  |  | 3.47 years
Options exercisable at the end of period |  |  | 4,438 |  |  | $ | 5.55 |  |  | 2.35 years
The following table presents the price distribution of stock options outstanding and exercisable as of September 30, 2025 and December 31, 2024:
Schedule of price distribution of stock options outstanding and exercisable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Number of shares as of |  |  | Number of shares as of |
|  | September 30, 2025 |  |  | December 31, 2024 |
|  | Outstanding |  |  | Exercisable |  |  | Outstanding |  |  | Exercisable |
Range of exercise prices: |  | (In thousands) |  |  | (In thousands) |
$2.00 - $2.99 |  |  | 1,098 |  |  |  | 1,098 |  |  |  | 1,197 |  |  |  | 1,197 |
$3.00 - $3.99 |  |  | 897 |  |  |  | 897 |  |  |  | 2,026 |  |  |  | 2,026 |
$4.00 - $4.99 |  |  | 1,190 |  |  |  | 1,190 |  |  |  | 1,262 |  |  |  | 972 |
$8.00 - $8.99 |  |  | 1,430 |  |  |  | – |  |  |  | – |  |  |  | – |
$10.00 - $10.99 |  |  | 1,613 |  |  |  | 1,253 |  |  |  | 1,612 |  |  |  | 892 |
Total shares |  |  | 6,228 |  |  |  | 4,438 |  |  |  | 6,097 |  |  |  | 5,087 |
At September 30, 2025, the aggregate intrinsic value of options outstanding and exercisable was $12.3 million. There were 1.4 million options exercised for the nine months ended September 30, 2025, compared to 1.7 million for the comparable period in 2024. The total intrinsic value of options exercised was $8.4 million and $8.0 million for the nine-month periods ended September 30, 2025, and 2024. There were 1,501,000 shares available for future stock option grants under existing plans as of September 30, 2025. Purchases of Company Stock The table below describes the purchase of our common stock for the nine-months ended September 30, 2025, and 2024:
Schedule of purchase of our common stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Nine Months Ended |
|  | September 30, 2025 |  |  | September 30, 2024 |
|  | Shares |  |  | Avg. Price |  |  | Shares |  |  | Avg. Price |
Open market purchases |  |  | 89,362 |  |  | $ | 9.48 |  |  |  | 473,202 |  |  | $ | 8.67 |
Shares redeemed upon net exercise of stock options |  |  | 451,937 |  |  |  | 9.76 |  |  |  | 876,456 |  |  |  | 8.66 |
Other |  |  | 100,000 |  |  |  | 8.62 |  |  |  | 120,000 |  |  |  | 9.49 |
Total stock purchases |  |  | 641,299 |  |  | $ | 9.54 |  |  |  | 1,469,658 |  |  | $ | 8.73 |
Reclassifications Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on net income or shareholders’ equity. Financial Covenants Certain of our securitization transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. As of September 30, 2025, we were in compliance with all such covenants. In addition, certain of our debt agreements other than our term securitizations contain cross-default provisions. Such cross-default provisions would allow the respective creditors to declare a default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be accompanied by acceleration of such other indebtedness. Provision for Contingent Liabilities We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Our legal counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that it is both probable that a liability has been incurred and the amount of the loss can be reasonably determined. Recent Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740),” which is intended to provide greater transparency in various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. This new standard will be effective for annual reporting periods beginning on or after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09; however, at the current time, the Company does not believe this ASU will have a material impact on its consolidated financial statements.

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