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) February 23, 2016

 

  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, Suite 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 February 23, 2016, the registrant announced its earnings for the year ended December 31, 2015.  A copy of the announcement is attached as an exhibit to this report.

 

The registrant will host a conference call on Wednesday, February 24, 2016, at 1:00 p.m. ET to discuss its results of operation and financial condition. A replay of the conference call will be available through March 2, 2016, by dialing 855 859-2056 (or 404 537-3406 for international participants), with conference identification number 49943840. A broadcast of the conference call will also be available 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.

 

 

 

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: February 23, 2016 By: /s/ JEFFREY P. FRITZ  
 

Jeffrey P. Fritz

Executive Vice President and Chief Financial Officer

Signing on behalf of the registrant

 

 

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Exhibit 99.1

 

  NEWS RELEASE

 

 

CPS ANNOUNCES FOURTH QUARTER 2015 EARNINGS

 

§Fourth quarter pretax income of $15.8 million
§Fourth quarter net income of $9.0 million, or $0.29 per diluted share
§Full year pretax income increased 18% to $61.4 million
§Full year net income increased 18% to $34.7 million, or $1.10 per diluted share
§New contract purchases of $269 million for the fourth quarter
§Total managed portfolio increases to $2.03 billion from $1.94 billion at September 30, 2015

 

 

LAS VEGAS, NV, February 23, 2016 (GlobeNewswire) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $9.0 million, or $0.29 per diluted share, for its fourth quarter ended December 31, 2015. This compares to net income of $8.0 million, or $0.25 per diluted share, in the fourth quarter of 2014, representing a 16.0% increase in diluted earnings per share.

 

Revenues for the fourth quarter of 2015 were $95.3 million, an increase of $11.8 million, or 14.2%, compared to $83.5 million for the fourth quarter of 2014. Total operating expenses for the fourth quarter of 2015 were $79.5 million, an increase of $10.4 million, or 15.1%, compared to $69.1 million for the 2014 period. Pretax income for the fourth quarter of 2015 was $15.8 million compared to pretax income of $14.3 million in the fourth quarter of 2014, an increase of 10.0%.

 

For the year ended December 31, 2015 total revenues were $363.7 million compared to $300.3 million for the year ended December 31, 2014, an increase of approximately $63.4 million, or 21.1%. Total expenses for the year ended December 31, 2015 were $302.3 million, an increase of $54.3 million, or 21.9%, compared to $248.0 million for the year ended December 31, 2014. Pretax income for the year ended December 31, 2015 was $61.4 million, compared to $52.2 million for the year ended December 31, 2014. Net income for the year ended December 31, 2015 was $34.7 million, an increase of 17.5%, compared to $29.5 million for the year ended December 31, 2014.

 

During the fourth quarter of 2015, CPS purchased $269.2 million of new contracts compared to $287.5 million during the third quarter of 2015 and $264.4 million during the fourth quarter of 2014. The Company's managed receivables totaled $2.031 billion as of December 31, 2015, an increase from $1.941 billion as of September 30, 2015 and $1.644 billion as of December 31, 2014.

 

Annualized net charge-offs for the fourth quarter of 2015 were 6.23% of the average owned portfolio as compared to 6.44% for the fourth quarter of 2014. Delinquencies greater than 30 days (including repossession inventory) were 9.53% of the total owned portfolio as of December 31, 2015, as compared to 7.18% as of December 31, 2014.

 

"We are pleased with our operating results for the fourth quarter and for the year 2015," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer. “Our managed portfolio is now in excess of $2 billion and we achieved our 17th consecutive quarter of increasing quarterly earnings. In addition, during the fourth quarter we added a third $100 million revolving credit facility with Credit Suisse and Ares, bringing our total short term funding capacity to $300 million.”

 

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Conference Call

 

CPS announced that it will hold a conference call on Wednesday, February 24, 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 February 24, 2016 and March 2, 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 49943840. 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

 

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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   Twelve months ended 
   December 31,   December 31, 
   2015   2014   2015   2014 
Revenues:                    
Interest income  $92,069   $79,652   $349,912   $286,734 
Servicing fees   36    218    319    1,376 
Other income   3,203    3,597    13,419    12,146 
    95,308    83,467    363,650    300,256 
Expenses:                    
Employee costs   16,671    14,732    59,556    50,129 
General and administrative   5,212    4,772    20,160    19,254 
Interest   16,036    12,833    57,745    50,395 
Provision for credit losses   36,085    31,433    142,618    108,228 
Other expenses   5,521    5,351    22,189    20,008 
    79,525    69,121    302,268    248,014 
Income before income taxes   15,783    14,346    61,382    52,242 
Income tax expense   6,816    6,336    26,701    22,726 
Net income  $8,967   $8,010   $34,681   $29,516 
                     
Earnings per share:                    
Basic  $0.35   $0.31   $1.34   $1.18 
Diluted  $0.29   $0.25   $1.10   $0.92 
                     
                     
Number of shares used in computing earnings per share:                    
Basic   25,774    25,470    25,935    25,040 
Diluted   30,948    32,060    31,584    32,032 

 

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Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

   December 31,   December 31, 
   2015   2014 
Assets:          
Cash and cash equivalents  $19,322   $17,859 
Restricted cash and equivalents   106,054    175,382 
Total cash and cash equivalents   125,376    193,241 
           
Finance receivables   1,985,093    1,595,956 
Allowance for finance credit losses   (75,603)   (61,460)
Finance receivables, net   1,909,490    1,534,496 
           
Finance receivables measured at fair value   61    1,664 
Deferred tax assets, net   37,597    42,847 
Other assets   70,383    60,810 
   $2,142,907   $1,833,058 
           
Liabilities and Shareholders' Equity:          
Accounts payable and accrued expenses  $29,509   $21,660 
Warehouse lines of credit   196,461    56,839 
Residual interest financing   9,042    12,327 
Debt secured by receivables measured at fair value       1,250 
Securitization trust debt   1,731,598    1,598,496 
Subordinated renewable notes   15,138    15,233 
    1,981,748    1,705,805 
           
Shareholders' equity   161,159    127,253 
   $2,142,907   $1,833,058 

 

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Operating and Performance Data ($ in millions)

 

   At and for the   At and for the 
   Three months ended   Twelve months ended 
   December 31,   December 31, 
   2015   2014   2015   2014 
                 
Contracts purchased  $269.20   $264.37   $1,060.54   $944.94 
Contracts securitized   102.10    269.93    880.33    901.07 
                     
Total managed portfolio  $2,031.14   $1,643.92   $2,031.14   $1,643.92 
Average managed portfolio   2,000.10    1,605.04    1,847.94    1,422.87 
                     
Allowance for finance credit losses as % of fin. receivables   3.81%    3.85%           
                     
Aggregate allowance as % of fin. receivables (1)   5.06%    4.88%           
                     
Delinquencies                    
31+ Days   7.61%    5.46%           
Repossession Inventory   1.92%    1.72%           
Total Delinquencies and Repo. Inventory   9.53%    7.18%           
                     
Annualized net charge-offs as % of average owned portfolio   6.23%    6.44%    6.42%    5.83% 
                     
Recovery rates (2)   38.3%    42.7%    41.3%    46.0% 

 

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   For the   For the 
   Three months ended   Twelve months ended 
   December 31,   December 31, 
   2015   2014   2015   2014 
   $(3)   %(4)  $(3)   %(4)  $(3)   %(4)  $(3)   %(4)
Interest income  $92.07    18.4%   $79.65    19.9%   $349.91    18.9%   $286.73    20.2% 
Servicing fees and other income   3.24    0.6%    3.82    1.0%    13.74    0.7%    13.52    1.0% 
Interest expense   (16.04)   -3.2%    (12.83)   -3.2%    (57.75)   -3.1%    (50.40)   -3.5% 
Net interest margin   79.27    15.9%    70.63    17.6%    305.91    16.6%    249.86    17.6% 
Provision for credit losses   (36.09)   -7.2%    (31.43)   -7.8%    (142.62)   -7.7%    (108.23)   -7.6% 
Risk adjusted margin   43.19    8.6%    39.20    9.8%    163.29    8.8%    141.63    10.0% 
Core operating expenses   (27.40)   -5.5%    (24.86)   -6.2%    (101.91)   -5.5%    (89.39)   -6.3% 
Pre-tax income  $15.78    3.2%   $14.35    3.6%   $61.38    3.3%   $52.24    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.

 

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