October 14, 2015

CPS Announces Third Quarter 2015 Earnings

  • Pretax income of $15.6 million
  • Net income of $8.8 million, or $0.28  per diluted share
  • New contract purchases of $288 million
  • Total managed portfolio increases to $1.941 billion from $1.822 billion at June 30, 2015
  • Acquired a second triple-A rating on third quarter asset-backed securitization

LAS VEGAS, NV, Oct. 14, 2015 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq:CPSS) ("CPS" or the "Company") today announced earnings of $8.8 million, or $0.28 per diluted share, for its third quarter ended September 30, 2015.  This compares to net income of $7.8 million, or $0.24 per diluted share, in the third quarter of 2014, a 16.7% increase in diluted earnings per share.

Revenues for the third quarter of 2015 were $94.0 million, an increase of $16.9 million, or 22.0%, compared to $77.1 million for the third quarter of 2014.  Total operating expenses for the third quarter of 2015 were $78.3 million, an increase of $15.1 million, or 23.9%, compared to $63.2 million for the 2014 period.  Pretax income for the third quarter of 2015 was $15.6 million compared to pretax income of $13.8 million in the third quarter of 2014, an increase of 13.4%.

For the nine months ended September 30, 2015 total revenues were $268.3 million compared to $216.8 million for the nine months ended September 30, 2014, an increase of approximately $51.5 million, or 23.8%.  Total expenses for the nine months ended September 30, 2015 were $222.7 million, an increase of $43.8 million, or 24.5%, compared to $178.9 million for the nine months ended September 30, 2014.  Pretax income for the nine months ended September 30, 2015 was $45.6 million, compared to $37.9 million for the nine months ended September 30, 2014.  Net income for the nine months ended September 30, 2015 was $25.7 million, an increase of 19.6%, compared to $21.5 million for the nine months ended September 30, 2014

During the third quarter of 2015, CPS purchased $287.5 million of new contracts, an increase of 2.9%, compared to $279.3 million during the third quarter of 2014.  The Company's managed receivables totaled $1.941 billion as of September 30, 2015, an increase from $1.822 billion as of June 30, 2015 and $1.519 billion as of September 30, 2014.

Annualized net charge-offs for the third quarter of 2015 were 6.27% of the average owned portfolio as compared to 6.18% for the third quarter of 2014.  Delinquencies greater than 30 days (including repossession inventory) were 8.81% of the total owned portfolio as of September 30, 2015, as compared to 6.66% as of September 30, 2014.

As previously reported, during September CPS closed its third term securitization transaction of 2015 and the 18th transaction since April 2011.  This is the Company's first transaction to earn a triple "A" rating from both DBRS and Standard & Poor's on the senior class of notes. In the senior subordinate structure, a special purpose subsidiary sold six tranches of asset-backed notes totaling $300.0 million.  The notes are secured by automobile receivables purchased by CPS and have a weighted average effective coupon of approximately 3.78%. 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 are pleased with our operating results for the third quarter of 2015," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  "Our managed portfolio is now in excess of $1.9 billion and we achieved our 16th consecutive quarter of increasing quarterly earnings.  Also, with our 2015-C securitization, we reached a significant milestone by earning two triple "A" ratings on the senior class of notes."

Conference Call

CPS announced that it will hold a conference call on Thursday, October 15, 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 October 15, 2015 and October 22, 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 59399169.  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.

        
Consumer Portfolio Services, Inc. and Subsidiaries       
Condensed Consolidated Statements of Operations       
(In thousands, except per share data)       
(Unaudited)        
               
    Three months ended    Nine months ended   
    September 30,    September 30,   
    2015    2014    2015    2014   
Revenues:              
Interest income  $  90,584   $  73,865   $  257,843   $  207,082   
Servicing fees     73      278      283      1,158   
Other income     3,334      2,907      10,215      8,550   
      93,991      77,050      268,341      216,790   
Expenses:              
Employee costs     15,254      12,733      42,884      35,397   
General and administrative     5,005      5,804      14,949      14,482   
Interest     14,848      12,239      41,709      37,562   
Provision for credit losses     37,411      27,287      106,533      76,795   
Other expenses     5,824      5,183      16,668      14,658   
      78,342      63,246      222,743      178,894   
Income before income taxes     15,649      13,804      45,598      37,896   
Income tax expense     6,806      6,028      19,885      16,390   
  Net income   $  8,843   $  7,776   $  25,713   $  21,506   
               
Earnings per share:              
Basic  $  0.34   $  0.31   $  0.99   $  0.86   
Diluted  $  0.28   $  0.24   $  0.81   $  0.67   
               
               
Number of shares used in computing earnings              
  per share:              
Basic   26,093    25,290    25,989    24,895   
Diluted   31,476    32,040    31,796    32,021   
               
               
Condensed Consolidated Balance Sheets       
(In thousands)       
(Unaudited)       
               
               
   September 30,  December 31,        
    2015    2014         
Assets:              
Cash and cash equivalents  $  20,915   $  17,859         
Restricted cash and equivalents   206,626    175,382         
Total cash and cash equivalents   227,541    193,241         
               
Finance receivables   1,902,156    1,595,956         
Allowance for finance credit losses   (78,759)   (61,460)        
Finance receivables, net   1,823,397    1,534,496         
               
Finance receivables measured at fair value   135     1,664         
Deferred tax assets, net   44,173    42,847         
Other assets   65,148    60,810          
   $  2,160,394   $  1,833,058         
               
Liabilities and Shareholders' Equity:               
Accounts payable and accrued expenses  $  28,859   $  21,660         
Warehouse lines of credit   46,934    56,839         
Residual interest financing   10,572    12,327         
Debt secured by receivables measured at fair value   --    1,250         
Securitization trust debt   1,903,578    1,598,496          
Subordinated renewable notes   15,192    15,233         
    2,005,135    1,705,805         
               
Shareholders' equity   155,259    127,253         
   $  2,160,394   $  1,833,058         
               
                
               
               
               
Operating and Performance Data ($ in millions)              
               
               
                
    At and for the     At and for the   
    Three months ended    Nine months ended   
     September 30,    September 30,   
    2015     2014   2015  2014  
               
Contracts purchased  $  287.54   $  279.30   $  791.33   $  680.57   
Contracts securitized     292.77      256.34      778.22      631.14   
               
Total managed portfolio  $  1,940.55   $  1,518.66   $  1,940.55   $  1,518.66   
Average managed portfolio     1,903.23      1,468.19      1,797.23      1,362.15   
               
Allowance for finance credit losses as % of fin. receivables   4.14%   3.73%        
                
Aggregate allowance as % of fin. receivables (1)   5.07%    4.94%        
               
Delinquencies              
31+ Days   7.31%   4.59%         
Repossession Inventory   1.51%   2.07%        
Total Delinquencies and Repo. Inventory    8.81%   6.66%         
               
Annualized net charge-offs as % of average owned portfolio   6.27%   6.18%   6.50%   5.59%  
               
Recovery rates (2)   40.0%   44.6%   42.7%   47.3%  
               
    For the   For the  
    Three months ended   Nine months ended  
    September 30,   September 30,  
    2015   2014   2015   2014  
   $(3) % (4) $(3) % (4) $(3) % (4) $(3) % (4) 
Interest income  $  90.58  19.0% $  73.87  20.1% $  257.84  19.1% $  207.08  20.3% 
Servicing fees and other income     3.41  0.7 %    3.19  0.9%    10.50  0.8%    9.71  1.0% 
Interest expense     (14.85) -3.1%    (12.24) -3.3%    (41.71) -3.1%    (37.56) -3.7% 
Net interest margin      79.14  16.6%    64.81  17.7%    226.63  16.8%    179.23  17.5% 
Provision for credit losses     (37.41) -7.9%    (27.29) -7.4%    (106.53) -7.9%    (76.80) -7.5% 
Risk adjusted margin     41.73  8.8%    37.52  10.2%    120.10  8.9%    102.43  10.0% 
Core operating expenses     (26.08) -5.5%    (23.72) -6.5%    (74.50) -5.5%    (64.54) -6.3% 
Pre-tax income  $  15.65  3.3% $  13.80  3.8% $  45.60  3.4% $  37.90  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.  
               
Investor Relations Contact



Jeffrey P. Fritz, Chief Financial Officer

844 878-2777

Source: Consumer Portfolio Services, Inc.

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