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) January 12, 2006
|
CONSUMER
PORTFOLIO SERVICES, INC.
|
|
(Exact
Name of Registrant as Specified in
Charter)
|
|
CALIFORNIA
|
|
001-14116
|
|
33-0459135
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
|
(Commission
File
Number)
|
|
(IRS
Employer
Identification
No.)
|
|
16355
Laguna Canyon Road, Irvine, CA 92618
|
|
(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
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM
7.01 REGULATION FD DISCLOSURE
The
registrant, Consumer Portfolio Services, Inc. ("CPS") is today making available
two presentations. Copies thereof are attached hereto as exhibits. Although
each
of the two exhibits is an update of similar documents filed as exhibits to
a
current report that CPS filed on October 11, 2005, CPS is not undertaking to
update further any information contained in these materials.
The
information furnished in this report shall not be deemed “filed” for purposes of
Section 18 of the Securities Act of 1933, as amended.
ITEM
9.01. FINANCIAL STATEMENTS AND EXHIBITS.
Neither
financial statements nor pro forma financial information are filed with this
report.
Two
exhibits are filed herewith:
|
Exhibit
Number
|
Description
|
|
|
|
|
99.1
|
Company
Summary
|
|
99.2
|
Historical
Timeline of Significant Events
|
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:
January 12, 2006
|
By:
/s/ Charles E. Bradley, Jr.
|
|
|
Charles
E. Bradley, Jr.
President
and chief executive officer
Signing
on behalf of the registrant
and
as principal executive officer
|
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
|
|
|
99.1
|
Company
Summary
|
|
99.2
|
Historical
Timeline of Significant Events
|
Exhibit
99.1
Consumer
Portfolio Services, Inc. Nasdaq: CPSS
Cautionary
Statement Information included in the following slides is believed to be
accurate, but is not necessarily complete. Such information should be reviewed
in its appropriate context. The implication that historical trends will continue
in the future, or that past performance is indicative of future results,
is
disclaimed. To the extent that one reading the following material nevertheless
makes such an inference, such inference would be a forward-looking statement,
and would be subject to risks and uncertainties that could cause actual results
to vary. Such risks include variable economic conditions, adverse portfolio
performance (resulting, for example, from increased defaults by the underlying
obligors), volatile wholesale values of collateral underlying CPS assets,
reliance on warehouse financing and on the capital markets, fluctuating interest
rates, increased competition, regulatory changes, the risk of obligor default
inherent sub-prime financing, and exposure to litigation.
Reference
to Public Reports Any person considering an investment in securities issued
by
CPS is urged to review the materials filed by CPS with the U.S. Securities
and
Exchange Commission ("Commission"). Such materials may be found by inquiring
of
the Commission's EDGAR search page
(http://www.sec.gov/edgar/searchedgar/companysearch.html) using CPS' sticker
symbol, which is "CPSS." Risk factors that should be considered are described
under the caption "Forward-looking Statements" in Item 7 of CPS's annual
report
on Form 10-K, which report is on file with the Commission and available for
review at the Commission's website. Such description of risk factors is
incorporated herein by reference. In particular, any person considering an
investment in Redeemable Subordinated Notes issued by CPS should take note
as
follows: CPS has filed a registration statement (including a prospectus)
with
the SEC for the offering of such Redeemable Subordinated Notes. Before you
invest, you should read the prospectus in that registration statement and
other
documents CPS has filed with the SEC for more complete information about
CPS and
such offering. You may get these documents for free by visiting EDGAR on
the SEC
Web site at www.sec.gov. Alternatively, CPS, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus if
you
request it by calling toll-free 1-800-234-5777.
Consumer
Portfolio Services, Inc. Specialty finance company focused on sub-prime auto
market Established in 1991; IPO in 1992 Through September 30, 2005, over
$5.8
billion in contract purchases from auto dealers
Consumer
Portfolio Services, Inc. As of September 30, 2005, managed portfolio of
approximately $1.1 billion Irvine, California headquarters and servicing
branches in Virginia, Florida, Georgia and Illinois Approximately 700
employees
U.S.
Auto Finance Market2004 U.S. auto financing = $392 billion*$207 billion new;
$185 billion used Company estimates 20%, or $78 billion is “sub-prime”
Historically fragmented market with few long-term dominant players* According
to
CNW Marketing Research, Inc.
Major
Market Participants AmeriCredit Capital One Triad HSBC/Household CitiFinancial
Wells Fargo Manufacturers’ Captives Regional Financial Inst. Regional
Independents
The
CPS Landscape as of September 30, 2005Contracts with over 7,000 dealers in
47
states71 employee marketing reps in field West coast headquarters and four
strategically located servicing branches
The
CPS
Landscape Primarily factory franchised dealers87% 2% 11% Contract Purchases
January through September 2005 Factory Franchised Rental Car Companies
Independents
The
CPS Landscape CPS’s risk-adjusted pricing results in program offerings covering
a wide band of the credit spectrum New contract acquisitions January through
September 2005 n/a 10,657 27.9 First Time Buyer 515 11,645 26.3 Mercury /
Delta
528 12,06 2 23.0 Standard 513 14,563 19.1 Alpha 526 17,049 16.8 Alpha Plus
520
18,951 15.3 Super Alpha 605 20,366 12.4 Preferred Avg FICO Avg Amount Financed
$Avg Yield % (1)Program (1) Contract APR as adjusted for fees charged (or
paid)
to dealer.
The
CPS
Landscape Product Mix 11 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Preferred
Super Alpha Alpha Plus Alpha Standard Mercury / Delta FTB Military New contract
acquisitions January through September 2005
The
CPS
Landscape Primarily late model pre-owned vehicles 21% New 79% Pre-owned 0%
5%
10% 15% 20% 25% 30% 35% 2006 2005 2004 2003 2002 2001 Earlier Securitization
2005-C Principal Balances by Model Year
13
The CPS
Landscape Affordable, basic transportation vehicles Average vehicle sales
price
of $14,817Average monthly payment of $373 for 62 months PONT 6% NISS 6% HOND
3%
Others 20% CHRY 5% TOYO 4% FORD 19% DODG 12% CHEV 17% SUZU 4% MITS 4% New
contract acquisitions January through Sept 2005
The
CPS
Landscape17%Percentage of homeowners$40,380 per year Average household income
5
years Average time in residence5 years Average time in job38 years Average
age
An emphasis on stable obligors with the ability to rehabilitate their credit
profile New contract acquisitions January through September 2005
14
Contract
Originations Centralized contract originations at Irvine HQ Maximizes control
and efficiencies Proprietary auto-decisioning system Makes initial credit
decision on approximately 80% of incoming applications Enhances dealer service
by shortening response time Pre-funding verification of employment, income
and
residency Protects against dealer and obligor fraud 15
Contract
Originations Infrastructure to Support Significant Originations Volumes Since
inception through June 2005 the Company has originated over $5.8 billion
16 0
200 400 600 800 1,000 1,200 1991 1992 1993 1994 1995 1996 1997 1998 1999
2000
2001 2002 2003 2004 2005 Annual Volumes ($ in millions)Annualized 2005
originations as of September 30, 2005
Contract
Servicing Geographically dispersed servicing centers enhance coverage and
staffing flexibility Offices are tied into the central database and paperless
collection system Dynamic work queue monitoring and balancing among offices
HQ
17
Contract
Servicing Early contact on past due accounts; commencing sixth day after
due
date Workloads allocated based on specialization Front end workload supplemented
by automated intelligent predictive dialer
Contract
Servicing Automated paperless servicing system builds dynamic work queues
based
on the account’s characteristics. Agents are assigned to work queues based on
their specialization. Supervisors with appropriate expertise oversee specialized
groups .Supervision Front End 30-59 days Supervision Predictive Dialer 0-29
days
Supervision Back End 60-119 days Supervision Skip Tracing Supervision Insurance
Claims Supervision Military Supervision Legal Supervision Bankruptcy Supervision
Repossession Supervision Liquidation Supervision Deficiency
19
Successful
Acquisitions$75 million portfolio acquired Servicing for additional $100
million
April 2004 $63.2 million SeaWest Financial Corp.(Purchase of certain assets
only)$150 million portfolio CPS maintains presence in TFC military niche
May
2003$23.7 million THE Finance Company$380 million portfolio$17.4 million
negative goodwill March 2002 $123.2 million MFN Financial Corp. Comments
Date
and Purchase Price Entity 20
Portfolio
Financing Two short-term warehouse facilities aggregating $350 million Quarterly
“AAA” rated asset-backed securities provide long-term matched funding Use of
multiple bond insurers enhances liquidity and structural flexibility Sale
of
subordinated tranches increases liquidity
0
50 100 150 200 250 300 350 1994-1 1994-2 1994-3 1994-4 1995-1 1995-2 1995-3
1995-4 1996-1 1996-1 1996-2 1996-3 1997-1 1997-2 1997-3 1997-4 1997-5 1998-1
1998-2 1998-3 1998-4 2001-A 2002-A 2002-B 2002-C 2003-A 2003-B 2003-C 2003-D
2004-A 2004-1 2004-B 2004-C 2004-D 2005-A 2005-B 2005-C Outstanding Balance
Original Balance$ in millions Portfolio Financing The Company has been a
regular
issuer of rated ABS since 1994Through Q3 2005: 38 deals aggregating over
$3.9
billion
Other
Financing ($ in thousands)Sub. Debt -Renewable Notes Sub. Debt -RISRs Senior
Debt -Affiliate of Levine Leichtman Source Shelf registration effective May
2005Wtdrate 8.3%Wtdorigterm 27 months $3,400Publicly issued notes from
199612.5%Maturing 2006$14,000 (3)A lender to CPS since 199811.75% 2005 and
2006
maturities$59,829 (2) Comments Terms Outstanding at September 30, 2005 (1)
(1)Issued $45,800 “NIM”ABS in November 2005.(2)Repaid $19,829 in December
2005.(3)Repaid $14,000 in January 2006. 23
0.00%
1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% Dec 95 Dec 97
Mar
99 Sep 99 Mar 00 Sep 00 Mar 01 Sep 01 Mar 02 Sep 02 Mar 03 Sep 03 Mar 04
Sep 04
Mar 05 Sep-05 CPS MFN TFC Asset Performance Receivables and Repo Inventory
30
Plus Days Past Due Quarterly rolling averages Consistent Performance and
Positive Trends 24
25
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 1995 1996 1997 1998 1999
2000
2001 2002 2003 2004 CPS MFN TFC Asset Performance Average Annual Net Credit
Losses Consistent Performance and Positive Trends MFN recoveries now exceed
incremental lossesThroughQ3 2005
26
0.00%
2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 1 2 3 4 5 6 7 8 9 10 11 12 13
14 15
16 17 18 19 20 21 22 23 24 1997 1998 2001 2002 2003 2004 2005 Asset Performance
Average ABS Pool Cumulative Net Credit Losses as of September 30, 2005Consistent
Performance and Positive Trends ABS pools from 2003 onward exhibit substantially
better performance. Months seasoned
Summary
Balance Sheets($ in thousands)$ 766,599 69,920 696,679 74,829 542,815 22,204
34,279 $ 22,552 $ 766,599 26,499 50,430 550,191 125,113 $ 14,366 December
31,
2004 410,310 968,975 102,465 77,120 Other debt Liabilities $ 492,470 $ 1,041,406
33,709 69,633 Warehouse lines of credit $ 29,018 $ 18,104 Accounts payable
and
other liabilities 245,118 804,118 Securitization trust debt 00 Residual interest
financing 82,160 72,431 Shareholders’equity $ 492,470 $ 1,041,406 14,093 31,181
Other Assets 111,702 30,057 Residual interest in securitizations 266,189
816,140
Finance receivables, net of allowance 67,277 152,452 Restricted Cash $ 33,209
$
11,576 Cash Assets December 31, 2003 September 30, 2005 27
Summary
Statements of Operations($ in thousands)4,05211,7502,6500Impairment on residual$
1,704 0 1,704 137,280 43,354 35,842 28,427 29,657 138,984 11,477 5,492 122,015
$
0 September 30, 2005 Nine Months Ended $ 10,421 $ 0 $ 0 Net gain on sale
of
contracts Year Ended$ (15,888) 0 (15,888) 148,580 32,574 32,147 30,939 38,173
132,692 14,394 12,480 105,818 December 31, 2004 (3,434) 0 Tax benefit (3,039)
(3,642) Income (loss) 37,141 29,352 Employee costs Expenses 23,861 21,800
Interest 31,581 24,353 General and administrative 108,025 98,765 11,390 20,610
Provision for credit losses $ 395 $ (3,642) Net income (loss) 104,986 95,123
19,343 11,151 Other income17,058 9,864 Servicing fees 58,164 74,108 Interest
income Revenues December 31, 2003September 30, 2004
Investment
Merits Market participant since 1991; CPS has weathered industry turbulence
to
remain one of the few independent public auto finance companies Disciplined
approach to credit quality and servicing Demonstrated growth in new contract
acquisitions and total managed portfolio Access to capital markets through
regular ABS issuance and “NIM” market
Investment
Merits Improving asset performance Portfolio accounting has gained traction
-second and third quarters of 2005 were first profitable quarters since June
2003 quarter Opportunistic, successful acquisitions Stable senior management
-President, Senior Vice Presidents and Vice Presidents average 11 years of
service with the Company 30
Consumer
Portfolio Services, Inc. Nasdaq: CPSS 31
Exhibit
99.2
Consumer
Portfolio Services, Inc. Historical Timeline of Significant Events Nasdaq:
CPSS
Cautionary
Statement Information included in the following slides is believed to be
accurate, but is not necessarily complete. Any person considering an investment
in securities issued by CPS is urged to review the materials filed by CPS
with
the U.S. Securities and Exchange Commission ("Commission"). Such materials
may
be found by inquiring of the Commission's EDGAR search page
(http://www.sec.gov/edgar/searchedgar/companysearch.html) using CPS' sticker
symbol, which is "CPSS." 2
Founded
March 1991AcquiredG&A Financial Appointed servicer of RTC portfolios, $16.5
million Flow purchase program with GECCYTD $1.4 mm contracts purchased
1991
YTD
$16.1 mm contracts purchased IPO -$5.0 mm for 20% of Company @ $5.00 per
share1992GECC commitment fulfilled 4
5YTD
$35.9 mm contracts purchased $50.0 mm contract purchase commitment from
institutional investor -“A”rated ABS structures$2.0 mm convertible note issued
to institutional investor $3.0 mm convertible note issued to institutional
investor A second $50.0 mm contract purchase commitment from institutional
investor
$24.0
mm “AAA”ABS insured by FSA (the Company’s first)$13.1 mm ABS$28.9 mm ABS1994 $50
mm warehouse facility with GECC $28.9 mm ABS YTD $132.0 mm contracts purchased
Managed portfolio = $168.4 mm6
YTD
$192.5 mm contracts purchased Managed portfolio = $288.9 mm$56.5 mm ABS (first
“B”Piece)$100.0 mm warehouse with GECC$20.1 mm ABS$51.9 mm ABS$47.4 mm ABS$13.3
mm secondary equity offering $20.0 mm public RISRs1995 7
$88.9
mm ABS(first public issuance)2 for 1 stock split1996 $92.9 mm ABS $67.1 mm
ABS
$92.1 mm ABS YTD $351.4 mm contracts purchased Managed portfolio = $505.9
mm
8
Est.
servicing branch in Chesapeake, VA 1997 $119.4 mm ABS $150.0 mm warehouse
with
First Union $105.9 mm ABS $95.7 mm ABS $102.3 mm ABS $20.0 mm public PENs
$15.0
mm Stanwich Financial debt $150.0 mm ABS YTD $600.1 mm contracts purchased
Managed portfolio = $902.7 mm
600.1 mm contracts purchased Managed
portfolio = $902.7 mm 9
10
YTD $1.1 billion contracts purchased Managed portfolio = $1.5 billion$187.0
mm
ABS$211.0 mm ABS$240.3 mm ABS$310.0 mm ABS$33.0 mm residual financing Cross
collateralized ABS hit default levels -Cash releases suspended Equity
downgraded; Stock to $2.00Global financial crisis temporarily cripples ABS
markets First LLCP debt; $25.0 mm plus 3 mm warrants1998
1999YTD
$424.4 mm contracts purchased Managed portfolio = $821.0 mm Approx. $420
mm
sold, servicing released$5.0 mm new LLCP debt; 1.3 mm warrants$318.0 mm contract
sale to GECC at discount; servicing released GECC & First Union warehouse
lines terminated Fairlane flow purchase program starts FSA agrees to 21%
enhancement on existing deals; ABS resume cash releases YTD $28.0 mm spread
cash
released
YTD
$607.0 mm contracts purchased Managed portfolio = $411.9 mm Approx. $600
mm
sold, servicing released$16.0 mm new LLCP debt Nuvell flow purchase program
starts Residual facility paid off CPS named in Stanwich Financial
litigation$75.0 mm warehouse facility with Greenwich & FSA 2000 YTD $81.0 mm
spread cash released
2001YTD
$672.3 mm contracts purchased Managed portfolio = $285.5 mm Approx. $ 535
mm
sold, servicing released YTD $43.7 mm spread cash released$8.0 mm debt
repurchase from LLCP & Stanwich Financial Nuvell program terminated$82.6 mm
ABS, insured by FSA, marks return to ABS market
2002
$99.3 mm ABS YTD $463.3 mm contracts purchased Managed portfolio = $595.2
mm
Approx. $180 mm sold, servicing released Acquired MFN for $123.2 mm($380.0
mm
portfolio)Fairlane program terminated$100.0 mm additional warehouse with
West LB
& XL Capital$55.0 mm ABS$130.5 mm ABS; (first XL Capital
deal)
2003
Change in ABS structures to eliminate gain on sale in favor of portfolio
accounting YTD $357.3 mm contracts purchased Managed portfolio = $741.1 mm
Acquired TFC for $23.7 mm($150.0 mm portfolio)$25.0 mm new LLCP debt$87.5
mm
ABS$145.4 mm ABS$109.0 mm ABS$75.0 mm ABS
2004Acquired
SeaWest assets for $63.2 mm($75.0 mm portfolio)$25.0 mm new LLCP debt$100.0
mm
ABS$82.1 mm ABS$96.4 mm ABS$92.8 mm ABS insured by Radian & XL Capital(TFC
& SeaWest)$120.0 mm ABS Stanwich Financial debt repaid; Settling primary
claims in CA litigation $44.0 mm “BBB” rated “NIM”ABS $44.0 mm “BBB”rated
“NIM”ABS YTD $447.2 mm contracts pu
rchased
Managed portfolio = $906.9 mm
2005$137.4
mm ABS Settlement of Stanwich Financial BK claim in CA$100.0 mm Renewable
Note
registration First profitable quarter since change in ABS structures to
portfolio accounting$137.5 mm ABS Through September 30, 2005, $503.1 mm
contracts purchased Managed portfolio = $1,055.9 mm$183.3 mm ABS Second
warehouse with Bear Stearns of $150.0 mm$45.8 mm NIM ABS
Consumer
Portfolio Services, Inc.Nasdaq: CPSS