February 14, 2017

CPS Announces Fourth Quarter 2016 Earnings

  • Pretax income of $12.7 million
  • Net income of $7.5 million, or $0.26 per diluted share
  • New contract purchases of $215 million
  • Total managed portfolio increases to $2.31 billion from $2.29 billion at September 30, 2016

LAS VEGAS, NV, Feb. 14, 2017 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq:CPSS) ("CPS" or the "Company") today announced earnings of $7.5 million, or $0.26 per diluted share, for its fourth quarter ended December 31, 2016.  This compares to net income of $9.0 million, or $0.29 per diluted share, in the fourth quarter of 2015.

Revenues for the fourth quarter of 2016 were $108.2 million, an increase of $12.9 million, or 13.5%, compared to $95.3 million for the fourth quarter of 2015.  Total operating expenses for the fourth quarter of 2016 were $95.5 million, an increase of $16.0 million, or 20.1%, compared to $79.5 million for the 2015 period.  Pretax income for the fourth quarter of 2016 was $12.7 million compared to pretax income of $15.8 million in the fourth quarter of 2015, a decrease of 19.8%.

For the year ended December 31, 2016 total revenues were $422.3 million compared to $363.7 million for the year ended December 31, 2015, an increase of $58.6 million, or 16.1%.  Total expenses for the year ended December 31, 2016 were $372.6 million, an increase of $70.4 million, or 23.3%, compared to $302.3 million for the year ended December 31, 2015.  Pretax income for the year ended December 31, 2016 was $49.7 million, compared to $61.4 million for the year ended December 31, 2015.  Net income for the year ended December 31, 2016 was $29.3 million compared to $34.7 million for the year ended December 31, 2015

During the fourth quarter of 2016, CPS purchased $215.3 million of new contracts compared to $242.1 million during the third quarter of 2016 and $269.2 million during the fourth quarter of 2015.  The Company's managed receivables totaled $2.308 billion as of December 31, 2016, an increase from $2.292 billion as of September 30, 2016 and $2.031 billion as of December 31, 2015.

Annualized net charge-offs for the fourth quarter of 2016 were 6.97% of the average owned portfolio as compared to 6.23% for the fourth quarter of 2015.  Delinquencies greater than 30 days (including repossession inventory) were 10.96% of the total owned portfolio as of December 31, 2016, as compared to 9.53% as of December 31, 2015.

"Our operating results for the fourth quarter of 2016 were in line with our expectations," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  "We marked our 22 nd consecutive quarter of positive earnings and with our fourth quarter securitization, achieved the lowest blended cost of funds of any deal since the second quarter of 2015.  We realized a year over year increase in revenue and improvement in operating leverage, although those positives were somewhat offset by increases in interest expense and provision for credit losses."

Conference Call

CPS announced that it will hold a conference call on Wednesday, February 15, 2017, 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. The conference identification number is 67683022.

A replay of the conference call will be available between February 15, 2017 and February 22, 2017, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 67683022.  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.

Investor Relations Contact

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

   
Consumer Portfolio Services, Inc. and Subsidiaries
  
Condensed Consolidated Statements of Operations
  
(In thousands, except per share data)
  
(Unaudited)
  
                 
   Three months ended  Twelve months ended   
   December 31,  December 31,   
    2016      2015     2016     2015     
Revenues:                
Interest income  $105,248     $92,069    $408,996    $349,912     
Other income   2,935      3,239     13,286     13,738     
    108,183      95,308     422,282      363,650     
Expenses:                
Employee costs    18,039      16,671     65,549     59,555     
General and administrative   6,624      5,212     24,840      20,161     
Interest   21,499      16,036     79,941     57,745     
Provision for credit losses   43,630      36,085     178,511      142,618     
Other expenses   5,740      5,521     23,780     22,189     
    95,532       79,525     372,621     302,268     
Income before income taxes   12,651      15,783     49,661     61,382     
Income tax expense   5,186      6,816     20,361     26,701     
Net income  $7,465     $8,967    $29,300    $34,681     
                 
Earnings per share:                
Basic  $0.31     $0.35    $ 1.20    $1.34     
Diluted  $0.26     $0.29    $1.01    $1.10     
                  
                 
Number of shares used in computing earnings                
per share:                
Basic   23,709      25,774     24,356     25,935     
Diluted   28,386      30,948     29,035     31,584     
                 
                  
Condensed Consolidated Balance Sheets        
(In thousands)        
(Unaudited)        
                 
                 
   December 31,   December 31,         
    2016      2015           
Assets:                 
Cash and cash equivalents  $13,936     $19,322           
Restricted cash and equivalents   112,754       106,054            
Total cash and cash equivalents   126,690      125,376           
                 
Finance receivables   2,267,943      1,985,093           
Allowance for finance credit losses   (95,578)     (75,603)          
Finance receivables, net   2,172,365      1,909,490           
                 
Deferred tax assets, net   42,845      37,597           
Other assets   68,502      56,462            
   $2,410,402     $2,128,925           
                 
Liabilities and Shareholders' Equity:                
Accounts payable and accrued expenses  $24,977     $29,509           
Warehouse lines of credit   103,358      194,056           
Residual interest financing   -      9,042           
Securitization trust debt   2,080,900      1,720,021            
Subordinated renewable notes   14,949      15,138           
    2,224,184      1,967,766           
                 
Shareholders' equity   186,218      161,159           
   $2,410,402     $2,128,925           
                 
                 
Operating and Performance Data ($ in millions)                
                  
   At and for the  At and for the   
   Three months ended  Twelve months ended   
   December 31,  December 31,   
    2016      2015     2016      2015     
                 
Contracts purchased  $215.29     $269.20    $1,088.79    $1,060.54     
Contracts securitized   210.00      102.10     1,215.00     880.33     
                 
Total managed portfolio  $2,308.07      $2,031.14    $2,308.07    $2,031.14     
Average managed portfolio   2,307.51      2,000.10     2,226.07     1,847.94     
                 
Allowance for finance credit losses as % of fin. receivables   4.21%     3.81%          
                 
Aggregate allowance as % of fin. receivables (1)   5.39%      5.06%          
                  
Delinquencies                
31+ Days   9.22%     7.61%          
Repossession Inventory   1.74%     1.92%          
Total Delinquencies and Repo. Inventory   10.96%     9.53%          
                  
Annualized net charge-offs as % of average owned portfolio   6.97%     6.23%    7.03%    6.42%    
                 
Recovery rates (2)   34.8%     38.3%    37.5%    41.3%    
                 
   For the For the  
   Three months ended Twelve months ended  
   December 31, December 31,  
    2016     2015    2016    2015   
   $ (3) % (4)  $ (3) % (4) $ (3) % (4) $ (3) % (4)  
Interest income  $105.25  18.2%  $92.07  18.4%  $409.00  18.4%  $349.91  18.9%  
Servicing fees and other income   2.94  0.5%   3.24  0.6%   13.29  0.6%   13.74  0.7%  
Interest expense     (21.50) -3.7%     (16.04) -3.2%     (79.94) -3.6%     (57.75)  -3.1%  
Net interest margin   86.68  15.0%   79.27  15.9%   342.34  15.4%   305.91  16.6%  
Provision for credit losses     (43.63) -7.6%     (36.09) -7.2%     (178.51) -8.0%     (142.62) -7.7%  
Risk adjusted margin   43.05  7.5 %   43.19  8.6%   163.83  7.4%   163.29  8.8%  
Core operating expenses   (30.40 ) -5.3%   (27.40) -5.5%   (114.17) -5.1%   (101.91) -5.5%  
Pre-tax income  $12.65  2.2%  $15.78  3.2%  $49.66  2.2%  $61.38  3.3%  
                 
                 
                 
(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.       
                 

Source: Consumer Portfolio Services, Inc.

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