cpss8k_dtd140415.htm



UNITED STATES 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) April 15, 2015

 
CONSUMER PORTFOLIO SERVICES, INC.
 
 
(Exact Name of Registrant as Specified in Charter)
 

 
 
 CALIFORNIA
 
1-11416
 
33-0459135
 
 
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 



 
3800 Howard Hughes Pkwy, Ste 1400, Las Vegas, NV 89169
 
 
(Address of Principal Executive Offices) (Zip Code)
 

Registrant's telephone number, including area code (949) 753-6800

 
Not Applicable
 
 
(Former name or former address, if changed since last report)
 

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 Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 


 
 
 

 
 
 
 

ITEM 2.02  RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
 
On April 15, 2015, the registrant announced its earnings for the quarter ended March 31, 2015.  A copy of the announcement is attached as an exhibit to this report.
 
The registrant will host a conference call on Thursday, April 16, 2015, at 1:00 p.m. ET to discuss its quarterly operating results. Those wishing to participate by telephone may dial-in at 877 312-5502 or 253 237-1131 approximately 10 minutes prior to the scheduled time. A replay of the conference call will be available between April 16, 2015 and April 23, 2015, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406, with conference identification number 24992318. A broadcast of the conference call will also be available live and for 90 days after the call via the Company’s web site at www.consumerportfolio.com.
 
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
 
         (c) Exhibits.
 
99.1   News Release dated April 15, 2015.


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.


 
CONSUMER PORTFOLIO SERVICES, INC.
   
Dated: April 15, 2015
By: /s/ JEFFREY P. FRITZ
 
 
Jeffrey P. Fritz
Executive Vice President and Chief Financial Officer
Signing on behalf of the registrant

 

 












cpss8kex991_dtd140415.htm
   
 
 
 
 
 
NEWS RELEASE
     
                                                                                        
CPS ANNOUNCES FIRST QUARTER 2015 EARNINGS

§  
Pretax income of $14.7 million
§  
Net income of $8.3 million, or $0.26  per diluted share
§  
New contract purchases of $234 million
§  
Total managed portfolio increases to $1.726 billion from $1.644 billion at December 31, 2014


IRVINE, California, April 15, 2015 (GlobeNewswire) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $8.3 million, or $0.26 per diluted share, for its first quarter ended March 31, 2015.  This compares to net income of $6.7 million, or $0.21 per diluted share, in the first quarter of 2014, a 23.8% increase in diluted earnings per share.

Revenues for the first quarter of 2015 were $86.0 million, an increase of $17.8 million, or 26.2%, compared to $68.1 million for the first quarter of 2014.  Total operating expenses for the first quarter of 2015 were $71.2 million, an increase of $14.9 million, or 26.4%, compared to $56.4 million for the 2014 period.  Pretax income for the first quarter of 2015 was $14.7 million compared to pretax income of $11.8 million in the first quarter of 2014, an increase of 25.4%.

During the first quarter of 2015, CPS purchased $233.9 million of new contracts, an increase of 23.2%, compared to $189.9 million during the first quarter of 2014.  The Company's managed receivables totaled $1.726 billion as of March 31, 2015, an increase from $1.644 billion as of December 31, 2014 and $1.295 billion as of March 31, 2014, as follows ($ in millions):

Originating Entity
March 31, 2015
December 31, 2014
March 31, 2014
CPS
$1,724.5
$1,641.8
$1,282.6
Fireside Bank
0.7
1.7
9.1
As Third Party Servicer
0.3
0.4
3.5
     Total
$1,725.5
$1,643.9
$1,295.2

Annualized net charge-offs for the first quarter of 2015 were 6.64% of the average owned portfolio as compared to 5.54% for the first quarter of 2014.  Delinquencies greater than 30 days (including repossession inventory) were 6.86% of the total owned portfolio as of March 31, 2015, as compared to 6.33% as of March 31, 2014.

As previously reported, during March CPS closed its first term securitization transaction of 2015 and the 16th transaction since April 2011, and the fourth consecutive transaction to earn a triple “A” rating on the senior class of notes. In the senior subordinate structure, a special purpose subsidiary sold five tranches of asset-backed notes totaling $245.0 million.  The notes are secured by automobile receivables purchased by CPS and have a weighted average
 
 
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effective coupon of approximately 3.01%. The transaction has initial credit enhancement consisting of a cash deposit equal to 1.00% of the original receivable pool balance.  The final enhancement level requires accelerated payment of principal on the notes to reach overcollateralization of 4.00% of the then-outstanding receivable pool balance.

"We believe that we are off to a good start for 2015," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  “We continue to maintain our credit and pricing discipline in a competitive environment and achieved our 14th consecutive quarter of increasing quarterly earnings.  The weighted average effective coupon of the notes from our 2015-A securitization was slightly less than that of our 2014-D transaction and we continue to see improvement in our operating leverage.  Our core operating expenses annualized as a percentage of our average managed portfolio decreased to 5.8% for the quarter, the lowest rate since the first quarter of 2010.”

Conference Call

CPS announced that it will hold a conference call on Thursday, April 16, 2015, at 1:00 p.m. ET to discuss its quarterly operating results.  Those wishing to participate by telephone may dial-in at 877 312-5502 or 253 237-1131 approximately 10 minutes prior to the scheduled time.
 
A replay of the conference call will be available between April 16, 2015 and April 23, 2015, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 24992318.  A broadcast of the conference call will also be available live and for 90 days after the call via the Company’s web site at www.consumerportfolio.com.
 
About Consumer Portfolio Services, Inc.

Consumer Portfolio Services, Inc. is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems, low incomes or limited credit histories. We purchase retail installment sales contracts primarily from franchised automobile dealerships secured by late model used vehicles and, to a lesser extent, new vehicles. We fund these contract purchases on a long-term basis primarily through the securitization markets and service the contracts over their lives.

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 incurred 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, 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 financial results, 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 the provision for credit losses may affect future performance.
 

 
 
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Investor Relations Contact

Jeffrey P. Fritz, Chief Financial Officer
844 878-2777


 
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Consumer Portfolio Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
             
   
Three months ended
   
March 31,
   
2015
 
2014
Revenues:
           
Interest income
  $ 82,359     $ 64,996  
Servicing fees
    148       513  
Other income
    3,482       2,637  
      85,989       68,146  
Expenses:
               
Employee costs
    14,486       10,890  
General and administrative
    4,836       3,603  
Interest
    13,173       13,381  
Provision for credit losses
    33,439       23,880  
Other expenses
    5,306       4,628  
      71,240       56,382  
Income before income taxes
    14,749       11,764  
Income tax expense
    6,416       5,059  
      Net income
  $ 8,333     $ 6,705  
                 
Earnings per share:
               
     Basic
  $ 0.33     $ 0.28  
     Diluted
  $ 0.26     $ 0.21  
                 
                 
Number of shares used in computing earnings
         
   per share:
               
     Basic
    25,635       24,355  
     Diluted
    31,991       32,011  
                 
                 
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                 
                 
   
March 31,
 
December 31,
      2015     2014
Assets:
               
Cash and cash equivalents
  $ 20,202     $ 17,859  
Restricted cash and equivalents
    173,451       175,382  
Total cash and cash equivalents
    193,653       193,241  
                 
Finance receivables
    1,683,904       1,595,956  
Allowance for finance credit losses
    (68,142 )     (61,460 )
Finance receivables, net
    1,615,762       1,534,496  
                 
Finance receivables measured at fair value
    743       1,664  
Deferred tax assets, net
    40,347       42,847  
Other assets
    54,948       60,810  
    $ 1,905,453     $ 1,833,058  
                 
Liabilities and Shareholders' Equity:
               
Accounts payable and accrued expenses
  $ 21,665     $ 21,660  
Warehouse lines of credit
    21,965       56,839  
Residual interest financing
    12,074       12,327  
Debt secured by receivables measured at fair value
    --       1,250  
Securitization trust debt
    1,697,649       1,598,496  
Subordinated renewable notes
    15,082       15,233  
      1,768,435       1,705,805  
                 
Shareholders' equity
    137,018       127,253  
    $ 1,905,453     $ 1,833,058  
                 
                 
                 
 
 
 

 
 
Operating and Performance Data ($ in millions)
         
                 
                 
                 
   
At and for the
 
   
Three months ended
 
   
March 31,
 
     
2015
   
2014
                 
Contracts purchased
 
$
233.89
   
$
189.89
 
Contracts securitized
   
258.33
     
174.58
 
                 
Total managed portfolio
 
$
1,725.52
   
$
1,295.23
 
Average managed portfolio
   
1,704.59
     
1,274.80
 
                 
Allowance for finance credit losses as % of fin. receivables
   
4.05
%
   
3.64
%
                 
Aggregate allowance as % of fin. receivables (1)
   
4.93
%
   
4.85
%
                 
Delinquencies
               
31+ Days
   
5.56
%
   
4.16
%
Repossession Inventory
   
1.30
%
   
2.18
%
Total Delinquencies and Repo. Inventory
   
6.86
%
   
6.33
%
                 
Annualized net charge-offs as % of average owned portfolio
   
6.64
%
   
5.54
%
                 
Recovery rates (2)
   
43.8
%
   
48.1
%
\

         
For the
         
Three months ended
         
March 31,
         
2015
     
2014
         
$(3)
%(4)    
$(3)
% (4)
Interest income
  $    
82.36
19.3%     
 $           65.00
20.4%
Servicing fees and other income
       
                3.63
0.9%     
                3.15
1.0%
Interest expense
       
             (13.17)
-3.1%     
             (13.38)
-4.2%
Net interest margin
       
              72.82
17.1%     
              54.77
17.2%
Provision for credit losses
       
             (33.44)
-7.8%     
             (23.88)
-7.5%
Risk adjusted margin
       
              39.38
9.2%     
              30.89
9.7%
Core operating expenses
       
             (24.63)
-5.8%     
             (19.12)
-6.0%
Pre-tax income
  $    
14.75
3.5%     
 $           11.76
3.7%
\
 
(1)  Includes allowance for finance credit losses and allowance for repossession inventory.
(2)  Wholesale auction liquidation amounts (net of expenses) as a percentage of the account balance at the time of sale.
(3)  Numbers may not add due to rounding.
(4)  Annualized percentage of the average managed portfolio.  Percentages may not add due to rounding.