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 14, 2017

 

  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 14, 2017, the registrant announced its earnings for the year ended December 31, 2016.  A copy of the announcement is attached as an exhibit to this report.

 

As disclosed in the announcement, the registrant will host a conference call on Wednesday, February 15, 2017, at 1:00 p.m. ET to discuss its results of operation and financial condition. Persons 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.

 

 

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

 

(d) Exhibits.

 

One exhibit is included with this report:

 

99.1     News release re earnings.

 

 

 

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 14, 2017 By: /s/ JEFFREY P. FRITZ  
 

Jeffrey P. Fritz

Executive Vice President and Chief Financial Officer

Signing on behalf of the registrant

 

 

Exhibit 99.1

 

  NEWS RELEASE

 

 

 

 

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, February 14, 2017 (GlobeNewswire) -- 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 22nd 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.”

 

 1 

 

 

 

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

 

 

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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 

 

 

 3 

 

 

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 

 

 

 

 4 

 

 

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.