July 27, 2016

CPS Announces Second Quarter 2016 Earnings

  • Pretax income of $12.3 million
  • Net income of $7.3 million, or $0.25 per diluted share
  • New contract purchases of $319 million
  • Total managed portfolio increases to $2.25 billion from $2.14 billion at March 31, 2016

LAS VEGAS, NV, July 27, 2016 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq:CPSS) ("CPS" or the "Company") today announced earnings of $7.3 million, or $0.25 per diluted share, for its second quarter ended June 30, 2016.  This compares to net income of $8.5 million, or $0.27 per diluted share, in the second quarter of 2015.

Revenues for the second quarter of 2016 were $104.9 million, an increase of $16.6 million, or 18.8%, compared to $88.4 million for the second quarter of 2015.  Total operating expenses for the second quarter of 2016 were $92.6 million, an increase of $19.5 million, or 26.6%, compared to $73.2 million for the 2015 period.  Pretax income for the second quarter of 2016 was $12.3 million compared to pretax income of $15.2 million in the second quarter of 2015, a decrease of 18.9%.

For the six months ended June 30, 2016 total revenues were $205.6 million compared to $174.4 million for the six months ended June 30, 2015, an increase of approximately $31.2 million, or 17.9%.  Total expenses for the six months ended June 30, 2016 were $181.0 million, an increase of $36.6 million, or 25.4%, compared to $144.4 million for the six months ended June 30, 2015.  Pretax income for the six months ended June 30, 2016 was $24.6 million, compared to $29.9 million for the six months ended June 30, 2015.  Net income for the six months ended June 30, 2016 was $14.5 million compared to $16.9 million for the six months ended June 30, 2015

During the second quarter of 2016, CPS purchased $319.1 million of new contracts compared to $312.3 million during the first quarter of 2016 and $269.9 million during the second quarter of 2015.  The Company's managed receivables totaled $2.254 billion as of June 30, 2016, an increase from $2.142 billion as of March 31, 2016 and $1.822 billion as of June 30, 2015.

Annualized net charge-offs for the second quarter of 2016 were 6.94% of the average owned portfolio as compared to 6.59% for the second quarter of 2015.  Delinquencies greater than 30 days (including repossession inventory) were 8.58% of the total owned portfolio as of June 30, 2016, as compared to 7.49% as of June 30, 2015.

"We are pleased with our operating results for the second quarter of 2016," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  "Our originations volumes increased both sequentially and year over year, our managed portfolio continues to grow, and we continue to achieve good execution in the market for our asset-backed securitizations."

Conference Call

CPS announced that it will hold a conference call on Thursday, July 28, 2016, 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 July 28, 2016 and August 4, 2016, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 51614443.  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  Six months ended  
   June 30,  June 30,  
    2016    2015    2016    2015   
Revenues:               
Interest income  $101,709   $84,900   $198,372   $167,259   
Servicing fees   24    62    47     210   
Other income   3,200    3,399    7,163    6,881   
     104,933    88,361    205,582    174,350   
Expenses:              
Employee costs   15,678    13,144    30,822    27,630   
General and administrative   6,569    5,108     11,900    9,944   
Interest   19,727    13,688    37,548    26,861   
Provision for credit losses   44,423     35,683    88,619    69,122    
Other expenses   6,211    5,538    12,139    10,844   
    92,608    73,161    181,028    144,401   
Income before income taxes   12,325    15,200    24,554    29,949   
Income tax expense   5,053    6,663    10,068    13,079   
Net income  $7,272   $8,537   $14,486   $16,870   
               
Earnings per share:              
Basic  $0.30   $0.33   $0.58   $0.65   
Diluted  $0.25   $0.27   $0.49   $0.53   
               
                
Number of shares used in computing earnings per share:              
Basic   24,538    26,234    24,917    25,936   
Diluted   29,111    31,917    29,632    31,955   
                
               
Condensed Consolidated Balance Sheets       
(In thousands)       
(Unaudited)       
               
               
   June 30,  December 31,        
     2016    2015         
Assets:              
Cash and cash equivalents  $15,752   $19,322         
Restricted cash and equivalents   115,268     106,054          
Total cash and cash equivalents   131,020    125,376         
                
Finance receivables   2,218,389    1,985,093         
Allowance for finance credit losses   (90,168)   (75,603 )        
Finance receivables, net   2,128,221    1,909,490          
               
Finance receivables measured at fair value   13    61         
Deferred tax assets, net   40,350    37,597         
Other assets   55,305    56,401         
   $2,354,909   $2,128,925         
               
Liabilities and Shareholders' Equity:              
Accounts payable and accrued expenses  $38,509   $29,509         
Warehouse lines of credit    165,103    194,056         
Residual interest financing   7,455     9,042         
Securitization trust debt   1,956,620    1,720,021         
Subordinated renewable notes   15,257    15,138         
    2,182,944    1,967,766         
                
Shareholders' equity    171,965    161,159         
   $2,354,909    $2,128,925         
               
                
Operating and Performance Data ($ in millions)               
               
               
               
   At and for the  At and for the  
   Three months ended  Six months ended  
   June 30,  June 30,  
    2016    2015    2016    2015   
               
Contracts purchased  $319.11   $269.90   $631.41   $503.79   
Contracts securitized   340.00    227.13    680.00    485.46   
               
Total managed portfolio  $2,253.70   $1,822.18   $2,253.70   $ 1,822.18   
Average managed portfolio   2,216.87    1,783.87    2,157.58    1,744.23   
               
Allowance for finance credit losses as % of fin. receivables   4.06%   4.18%        
               
Aggregate allowance as % of fin. receivables (1)   5.02%   5.00%        
                
Delinquencies              
31+ Days   7.10%   6.12%        
Repossession Inventory   1.48%   1.37%        
Total Delinquencies and Repo. Inventory   8.58%   7.49%        
               
Annualized net charge-offs as % of average owned portfolio   6.94%   6.59%   7.24%   6.62%  
               
Recovery rates (2)   38.9%   44.8%   39.4%   44.4%  
               
   For the For the 
   Three months ended Six months ended 
   June 30, June 30, 
    2016   2015   2016    2015  
   $ (3)% (4) $ (3)% (4) $ (3)% (4) $ (3)% (4) 
Interest income  $101.71  18.4% $84.90  19.0% $198.37  18.4% $167.26  19.2% 
Servicing fees and other income    3.22  0.6%  3.46  0.8%  7.21  0.7%  7.09  0.8% 
Interest expense     (19.73) -3.6 %    (13.69) -3.1%     (37.55) -3.5%    (26.86) -3.1% 
Net interest margin   85.21  15.4%  74.67  16.7%  168.03  15.6%  147.49  16.9% 
Provision for credit losses     (44.42) -8.0%    (35.68) -8.0%    (88.62) -8.2%    (69.12) -7.9% 
Risk adjusted margin   40.78  7.4%  38.99  8.7%  79.42  7.4%  78.37  9.0% 
Core operating expenses   (28.46) -5.1%  (23.79) -5.3%  (54.86) -5.1%  (48.42) -5.6% 
Pre-tax income  $12.33  2.2% $15.20  3.4% $24.55  2.3% $29.95  3.4% 
               
               
               
(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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