SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON
DC 20549
————
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported) October 28, 2008
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CONSUMER
PORTFOLIO SERVICES, INC.
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(Exact
Name of Registrant as Specified in
Charter)
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CALIFORNIA
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1-14116
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33-0459135
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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16355
Laguna Canyon Road, Irvine, CA 92618
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(Address
of Principal Executive Offices) (Zip
Code)
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Registrant's
telephone number, including area code (949) 753-6800
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Not
Applicable
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(Former
name or former address, if changed since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
1
ITEM
2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The
information in this Item 2.02, and the related Exhibit 99.1, is being furnished
and shall not be deemed "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section. The information in this Current Report shall not be
incorporated by reference into any registration statement or other document
pursuant to the Securities Act of 1933, as amended.
On
October 28, 2008, the registrant issued a news release announcing its results
for the quarter ended September 30, 2008. A copy of the release is attached as
Exhibit 99.1. The registrant also announced that it will hold its regular
quarterly conference call on October 29, 2008 at 1:30 p.m. eastern daylight time
to discuss its quarterly results. Those wishing to participate by telephone may
dial in at 973-582-2717 approximately 10 minutes prior to the scheduled
time.
ITEM
9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c)
Exhibits.
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Exhibit
Number
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Description
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99.1
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Consumer
Portfolio Services, Inc. October 28, 2008 press
release.
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2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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Consumer
Portfolio Services, Inc.
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Dated: October
29, 2008
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By:
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/s/ Robert
E. Riedl
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Robert
E. Riedl
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Senior
Vice President and Chief Investment Officer
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3
EXHIBIT
INDEX
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Exhibit
Number
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Description
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99.1
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Consumer
Portfolio Services, Inc. October 28, 2008 press
release.
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4
CONSUMER
PORTFOLIO SERVICES, INC. REPORTS
2008
THIRD QUARTER RESULTS
IRVINE, California, October 28, 2008
(MARKET WIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS”
or the “Company”) today announced results for its third quarter ended September
30, 2008.
Total
revenues for the third quarter of 2008 decreased approximately $11.1 million, or
10.8%, to $91.7 million, compared to $102.8 million for the third quarter of
2007. Total operating expenses for the third quarter of 2008 were
$104.4 million, an increase of $7.9 million, or 8.2%, as compared to $96.4
million for the 2007 period.
Net loss
for the third quarter of 2008 was $(6.3) million, or $(0.32) per diluted share,
compared to net income of $3.7 million, or $0.16 per diluted share, for the
year-ago quarter. The financial results for the third quarter of 2008
were negatively impacted by the completion of the previously announced
structured whole loan sale in September 2008. The Company incurred a
loss on the transaction as the effective purchase price of the sold receivables
was less than the carrying value on the Company’s balance sheet.
For the
nine months ended September 30, 2008, total revenues increased approximately
$8.8 million, or 3.1%, to $293.8 million, compared to $285.0 million for the
nine months ended September 30, 2007. Total expenses for the nine
months ended September 30, 2008 were $300.0 million, an increase of $32.9
million, or 12.3%, as compared to $267.1 million for the nine months ended
September 30, 2007.
Net loss
for the nine months ended September 30, 2008 was $(2.7) million, or $(0.14) per
diluted share, compared to net income of $10.4 million, or $0.45 per diluted
share, for the nine months ended September 30, 2007. As discussed
above, the financial results for the third quarter of 2008 were negatively
impacted by the completion of the previously announced structured whole loan
sale in September 2008.
During
the third quarter of 2008, CPS purchased $33.6 million of contracts from dealers
as compared to $79.8 million during the second quarter of 2008 and $340.2
million during the third quarter of 2007. During the first nine
months of 2008, CPS purchased $289.6 million of contracts from dealers as
compared to $1,016.5 million during the first nine months of 2007. The Company's managed
receivables totaled $1,829.5 million as of September 30, 2008, as compared to
$2,053.1 million as of September 30, 2007, as follows ($ in
millions):
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Originating
Entity
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September 30,
2008
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September 30,
2007
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CPS
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$1,606.6
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$1,987.7
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TFC
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27.0
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63.1
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MFN
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0.0
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0.2
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SeaWest
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0.2
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1.4
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As
Third Party Servicer
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195.7
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0.7
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Total
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$1,829.5
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$2,053.1
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As
previously reported, in September 2008 the Company completed a structured whole
loan sale with the sale of $199 million of automobile purchase
receivables. In addition, the Company extended the maturity of one of
its warehouse credit facilities from September 30, 2008 to November 28,
2008.
Annualized
net charge-offs during the first nine months of 2008 were 7.2% of the average
owned portfolio as compared to 5.0% during the same period in
2007. Delinquencies greater than 30 days (including repossession
inventory) were 7.7% of the total owned portfolio as of September 30, 2008, as
compared to 6.1% as of September 30, 2007. The increase in net
charge-off and delinquency percentages can be partly attributed to the aging of
the portfolio and the decrease in the size of the managed portfolio as new
contract purchases have not replaced portfolio run-off.
“While
the completion of the whole loan sale negatively impacted our earnings, the
quality of our franchise allowed us to access liquidity during this very
difficult capital markets environment,” said Charles E. Bradley, Jr., Chief
Executive Officer. “We expect the operating landscape to be
challenging in the near term and have made adjustments to our business
accordingly. We have scaled back our operating infrastructure to
focus on servicing our portfolio and maximizing collections while maintaining
our best dealer relationships. With these moves, we feel
confident in our ability to weather the current economic turbulence and should
be well positioned to exploit a tremendous industry opportunity once the capital
markets stabilize.”
Conference
Call
CPS
announced that it will hold a conference call tomorrow, October 29, 2008, at
1:30 p.m. EDT to discuss its quarterly earnings. Those wishing to participate by
telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the
scheduled time.
A replay
will be available between October 29, 2008 and November 5, 2008, beginning one
hour after conclusion of the call, by dialing 800-642-1687 or 706-645-9291 for
international participants, with pin number 68472980. A broadcast of
the conference call will also be available live and for 30 days after the call
via the Company’s web site at www.consumerportfolio.com
and at www.streetevents.com.
About
Consumer Portfolio Services, Inc.
Consumer
Portfolio Services, Inc. is a specialty finance company engaged in purchasing
and servicing new and used retail automobile contracts originated primarily by
franchised automobile dealerships and to a lesser extent by select independent
dealers of used automobiles in the United States. We serve as an alternative
source of financing for dealers, facilitating sales to sub-prime customers, who
have limited credit history, low income or past credit problems and who
otherwise might not be able to obtain financing from traditional
sources.
Forward-looking
statements in this news release include the Company's recorded revenue, expense
and provision for credit losses, because these items are dependent on the
Company’s estimates of future losses. The accuracy of such estimates
may be adversely affected by various factors, which include (in addition to
risks relating to the economy generally) the following: possible increased
delinquencies; repossessions and losses on retail installment contracts;
incorrect prepayment speed and/or discount rate assumptions; possible
unavailability of qualified personnel, which could adversely affect the
Company’s ability to service its portfolio; possible increases in the rate of
consumer bankruptcy filings or the effects of changes in bankruptcy law, which
could adversely affect the Company’s rights to collect payments from its
portfolio; other changes in government regulations affecting consumer credit;
possible declines in the market price for used vehicles, which could adversely
affect the Company’s realization upon repossessed vehicles; and economic
conditions in geographic areas in which the Company's business is concentrated.
All of such factors also may affect the Company’s future earnings, as to which
there can be no assurance.
Any
implication that the results of the most recently completed quarter are
indicative of future results is disclaimed, and the reader should draw no such
inference. Factors such as those identified above in relation to provision for
credit losses may affect future performance.
Investor
Relations Contacts
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Consumer
Portfolio Services, Inc.
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Robert
E. Riedl
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949-753-6800
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Erica
Waldow
888-505-9200
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Consumer
Portfolio Services, Inc. and Subsidiaries
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Condensed
Consolidated Statements of Operations
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(In
thousands, except per share data)
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(Unaudited)
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Three
months ended September 30,
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Nine
months ended September 30,
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2008
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2007
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2008
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2007
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Revenues:
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Interest
income
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87,706 | $ | 97,423 | 281,924 | $ | 267,361 | ||||||||||
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Servicing
fees
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235 | 274 | 944 | 668 | ||||||||||||
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Other
income
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3,775 | 5,058 | 10,930 | 17,020 | ||||||||||||
| 91,716 | 102,755 | 293,798 | 285,049 | |||||||||||||
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Expenses:
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||||||||||||||||
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Employee
costs
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12,455 | 11,566 | 38,824 | 33,704 | ||||||||||||
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General
and administrative
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21,460 | 6,335 | 36,380 | 18,386 | ||||||||||||
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Interest
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40,963 | 36,382 | 120,952 | 99,600 | ||||||||||||
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Provision
for credit losses
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25,961 | 36,300 | 91,764 | 98,458 | ||||||||||||
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Other
expenses
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3,515 | 5,832 | 12,033 | 16,914 | ||||||||||||
| 104,354 | 96,415 | 299,953 | 267,062 | |||||||||||||
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Income
(loss) before income taxes
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(12,638 | ) | 6,340 | (6,155 | ) | 17,987 | ||||||||||
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Income
tax expense (benefit)
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(6,312 | ) | 2,663 | (3,432 | ) | 7,591 | ||||||||||
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Net
income (loss)
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$ | (6,326 | ) | $ | 3,677 | $ | (2,723 | ) | $ | 10,396 | ||||||
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Earnings
(loss) per share:
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Basic
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$ | (0.32 | ) | $ | 0.18 | $ | (0.14 | ) | $ | 0.49 | ||||||
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Diluted
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(0.32 | ) | 0.16 | (0.14 | ) | 0.45 | ||||||||||
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Number
of shares used in computing earnings (loss)
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per
share:
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Basic
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19,693 | 20,779 | 19,275 | 21,279 | ||||||||||||
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Diluted
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19,693 | 22,438 | 19,275 | 23,184 | ||||||||||||
| Condensed Consolidated Balance Sheets |
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|||||||||||||||
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|||||||||||||||
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|||||||||||||||
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September
30,
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December
31,
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|||||||||||||||
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2008
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2007
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Cash
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$ | 23,230 | $ | 20,880 | ||||||||||||
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Restricted
cash
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167,774 | 170,341 | ||||||||||||||
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Total
Cash
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191,004 | 191,221 | ||||||||||||||
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Finance
receivables
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1,573,219 | 2,068,004 | ||||||||||||||
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Allowance
for finance credit losses
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(66,919 | ) | (100,138 | ) | ||||||||||||
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Finance
receivables, net
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1,506,300 | 1,967,866 | ||||||||||||||
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Residual
interest in securitizations
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1,200 | 2,274 | ||||||||||||||
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Deferred
tax assets, net
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53,867 | 58,835 | ||||||||||||||
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Other
assets
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65,887 | 62,617 | ||||||||||||||
| $ | 1,818,258 | $ | 2,282,813 | |||||||||||||
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Accounts
payable and other liabilities
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$ | 24,768 | $ | 36,097 | ||||||||||||
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Warehouse
lines of credit
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8,692 | 235,925 | ||||||||||||||
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Residual
interest financing
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68,250 | 70,000 | ||||||||||||||
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Securitization
trust debt
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1,550,717 | 1,798,302 | ||||||||||||||
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Senior
secured debt, related party
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19,813 | --- | ||||||||||||||
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Subordinated
debt
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28,182 | 28,134 | ||||||||||||||
| 1,700,422 | 2,168,458 | |||||||||||||||
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Shareholders'
equity
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117,836 | 114,355 | ||||||||||||||
| $ | 1,818,258 | $ | 2,282,813 | |||||||||||||
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Operating
and Performance Data ($ in thousands)
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||||||||||||||||
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At
and for the
Three
months
ended
September 30,
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At
and for the
Nine
months
ended
September 30,
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|||||||||||||||
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2008
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2007
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2008
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2007
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Contract
purchases
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33,636 | 340,244 | 289,560 | 1,016,547 | ||||||||||||
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Total
managed portfolio
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1,829,468 | 2,053,135 | 1,829,468 | 2,053,135 | ||||||||||||
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Average
managed portfolio
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1,880,787 | 2,008,911 | 2,005,682 | 1,839,382 | ||||||||||||
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Net
interest margin (1)
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46,743 | 61,041 | 160,972 | 167,761 | ||||||||||||
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Risk
adjusted margin (2)
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20,782 | 24,741 | 69,208 | 69,303 | ||||||||||||
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Core
operating expenses (3)
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37,430 | 23,733 | 87,237 | 69,004 | ||||||||||||
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Annualized
% of average managed portfolio (4)
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7.96 | % | 4.73 | % | 5.80 | % | 5.00 | % | ||||||||
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Allowance
for finance credit losses as % of fin. receivables
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4.25 | % | 4.84 | % | ||||||||||||
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Aggregate
allowance as % of fin. receivables (5)
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6.03 | % | 5.82 | % | ||||||||||||
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Delinquencies
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||||||||||||||||
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31+
Days
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5.20 | % | 4.61 | % | ||||||||||||
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Repossession
Inventory
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2.48 | % | 1.45 | % | ||||||||||||
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Total
Delinquencies and Repossession Inventory
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7.68 | % | 6.06 | % | ||||||||||||
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Annualized
net charge-offs as % of average owned portfolio
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7.89 | % | 5.58 | % | 7.20 | % | 4.95 | % | ||||||||
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(1) Interest
income less interest expense.
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(2) Net
interest margin less provision for credit losses.
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(3) Total
expenses less interest and provision for credit losses.
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(4) 2008
results include a loss on the $199 million structured whole loan sale
completed in September 2008.
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(5) Includes
allowance for finance credit losses and allowance for repossession
inventory.
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