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) May 22, 2007
|
CONSUMER
PORTFOLIO SERVICES, INC.
|
|
(Exact
Name of Registrant as Specified in
Charter)
|
|
CALIFORNIA
|
|
0-51027
|
|
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
CPS
is
today making available one presentation consisting of 29 slides. A copy is
attached as an exhibit. Although
the exhibit is an update of a similar presentation made available on February
20, 2007 (as an exhibit to a current report on Form 8-K). CPS is not undertaking
to update further any information contained in this presentation.
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.
One
exhibit is attached:
|
Exhibit
Number
|
Description
|
|
|
|
|
99.1
|
Company
Summary
|
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:
May 22, 2007
|
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.
|
EXHIBIT
99.1
Consumer
Portfolio Services, Inc. Nasdaq: CPSS As of March 31, 2007
Safe
Harbor 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
CPSis urged to review the materials filed by CPS with the U.S. Securities and
Exchange Commission ("Commission"). Such materials may be foundby inquiring
of
the Commission's EDGAR search page
(http://www.sec.gov/edgar/searchedgar/companysearch.html) using CPS's ticker
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.
Company
Overview ⑀⏇Specialty finance company focused on sub-prime auto market
⑀⏇Established in 1991; IPO in 1992 ⑀⏇Irvine, California headquarters and three
servicing branches in Virginia, Florida and Illinois
Company
Overview ⑀⏇Through March 31, 2007, approximately $7.4 billion in contract
purchases from auto dealers ⑀⏇As of March 31, 2007, managed portfolio of
approximately $1.73 billion ⑀⏇Approximately 846 employees
U.S.
Auto Finance Market ⑀⏇2005 U.S. auto financing = $407 billion(1) ⑀⍽$211 billion
new; $196 billion used ⑀⏇Company estimates 20%, or $81 billion is “sub-prime”
⑀⏇Historically fragmented market with few long-term dominant players
⑀⏇Significant barriers to entry (1)According to CNW Marketing Research,
Inc.
Major
Market Participants ⑀⏇AmeriCredit ⑀⏇Capital One ⑀⏇Triad ⑀⏇HSBC/Household ⑀⏇Wells
Fargo ⑀⏇CitiFinancial ⑀⏇Chase Custom ⑀⏇Manufacturers’ Captives
+The
CPS Landscape as
of March 31, 2007⑀⏇Contracts
with over 7,700 dealers in 47 states ⑀⏇101 employee marketing reps in the field
and 7 in-house ⑀⏇West coast headquarters and three strategically located
servicing branches ⑀⏇Primarily factory franchise dealers Independents(1)11%
Rental Car Companies1% Factory Franchised88% Contract Purchases for the three
months ended March 31, 2007 (1)Includes contract purchases of TFC, a subsidiary
that targets enlisted members of U.S. Armed Forces.
Collateral
Description ⑀⏇Primarily late model pre-owned vehicles ⑀⍽16% New ⑀⍽84% Pre-owned
⑀⍽70% Domestic ⑀⍽30% Foreign 0%5%10%15%20%25%30%35%200720062005200420032002EarlierSecuritization
2007-A Principal Balances by Model Year
Program
Overview CPS’s risk-adjusted pricing results in program offerings covering a
wide band of the credit spectrum New
contract acquisitions for the three months ended March 31, 2007 Program Avg
Yield(1) Avg Amount Financed Avg FICO % of Purchases(2) Preferred
11.9%$19,218557 521 525 517 519 518 538 6% Super Alpha 14.8%$19,818 12% Alpha
Plus 16.6%$17,710 17% Alpha 18.6% $15,637 41% Standard 22.7%$13,268 10% Mercury
/ Delta 26.1%$11,582 9% First Time Buyer 26.7% $11,410 7% (1)Contract APR as
adjusted for fees charged (or paid) to dealer. (2)Under the CPS
programs
Borrower
and Contract Profile An emphasis on stableborrowers
with the ability to rehabilitate their credit profile New
contract acquisitions under the CPS programs for the three months ended March
31, 2007 Borrower:
Average age-37 years Average time in job-5 years Average time in residence-5
years Average credit history Average household income-9 years $39,504 per year
Percentage of homeowners Contract:
Average amount financed average monthly payment Average term Weighted average
APR-17% $15,383 $379 63 months 18.1%
Contract
Originations ⑀⏇Centralized contract originations at Irvine HQ ⑀⍽Maximizes
control and efficiencies ⑀⏇Proprietary auto-decisioning system ⑀⍽Makes initial
credit decision on approximately 90% of incoming applications ⑀⍽Enhances dealer
service by shortening response time ⑀⏇Pre-funding verification of employment,
income and residency ⑀⍽Protects against dealer and obligor
fraud
Historical
Origination
Volume02004006008001,0001,20019911992199319941995199619971998199920002001200220032004200520062007Annual
Volumes ($ in millions)Since inception through March 31, 2007 the Company
has originated over $7.3 billion
Contract
Servicing ⑀⏇Geographically dispersed servicing centers enhance coverage and
staffing flexibility and drive portfolio performance ⑀⏇Offices are tied into the
central database and paperless collection system ⑀⏇Early contact on past due
accounts; commencing as early as first day after due date ⑀⏇Early stage workload
supplemented by automated intelligent predictive dialer ⑀⏇Workloads allocated
based on specialization and behavioral scorecards, which enhances
efficiencies
Successful
Acquisitions Entity-Date
and Purchase Price-Comments
MFN Financial Corp.-March 2002 $123.2 million- ⑀⏇$380 million portfolio ⑀⏇$17.4
million negative goodwill The Finance Company-May 2003 $23.7 million- ⑀⏇$150
million portfolio ⑀⏇CPS maintains presence in TFC military niche SeaWest
Financial Corp. (Purchase of certain assets only)-April 2004 $63.2 million-
⑀⏇$75 million portfolio acquired ⑀⏇Servicing for additional $100 million
Strategies
for Future Growth ⑀⏇Increase dealer penetration and expand dealer network
⑀⍽Expansion of marketing rep network ⑀⍽Continue high level of dealer contact
with improved service levels ⑀⍽Expansion of risk-based pricing model ⑀⍽Expansion
of the independent dealer program ⑀⍽Retention of existing customers
Portfolio
Financing ⑀⏇Two senior warehouse facilities aggregating $400 million ⑀⏇$25
million subordinated warehouse facility allows advance ratesup to 93% across
both senior lines ⑀⏇Quarterly “AAA” rated asset-backed securities provide
long-term matched funding -$5.4 billion in 44 deals since 1994 ⑀⏇Use of multiple
bond insurers enhances liquidity and structural flexibility ⑀⏇Sale of
subordinated tranches increases liquidity ⑀⏇Revolving and term residual interest
financings reduce cost of capital
Historical
Corporate
Debt-20406080100120140160Dec-95Dec-96Dec-97Dec-98Dec-99Dec-00Dec-01Dec-02Dec-03Dec-04Dec-05Dec-06Mar-07Period
Ending$ in millions0.00%5.00%10.00%15.00%20.00%25.00%30.00%35.00%Residual
Interest Debt (left axis)LT Debt (left axis)Residual and LT Debt to
ManagedPortfolio (right axis)
Total
Managed PortfolioComposition
by Source ($ in millions)$0$200$400$600$800$1,000$1,200$1,400$1,600$1,800Dec-02Dec-03Dec-04Dec-05Dec-06Mar-07SeaWest
3rd PartySeaWestTFCMFNCPSPrimary
Driver of Growth is CPS “Organic” Contract Purchases with over 95% now On
Balance Sheet$1,727
mm$595 mm$1,566 mm1,122 mm907 mm744 mm
Delinquencies
and RepoInventory (1)Three
quarter rolling averagesConsistent Performance and Positive
Trends(1)30
or more days past due.(2)MFN transactions called in August 2005. 9.00%
Dec 95 Dec 96 Dec 97 Dec 98 Mar 99 Jun 99 Sep 99 Dec 99 Mar 00 Jun 00 Sep
00Dec-00 Mar 01 Jun 01 Sep 01 Dec 01 Mar 02 Jun 02 Sep 02 Dec 02 Mar 03 Jun
03
Sep 03 Dec 03 Mar 04 Jun 04 Sep 04 Dec 04 Mar
05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07CPS MFN (2)TFC
0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%
12345678910111213141516171819202122232419971998200120022003200420052006Static
Pool PerformanceAverage ABS Pool Cumulative Net Losses as of March 31,
2007Consistent
Performance and Positive TrendsABS
pools from 2003 onward exhibit substantially better performance.Months seasoned
0.00%2.00%4.00%6.00%8.00%10.00%12.00%14.00%
PortfolioAuction
ValuesLiquidation
Values for RepoSales Have Increased from 2003(1)(1)
Net liquidation proceeds as a percentage of the net balanceat the time of sale
of the vehicle. 50%Mar-03Jun-03Sep-03Dec-03Mar-04Jun-04Sep-04Dec-04Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07
0%10%20%30%40%
Repossession
Sales in Q1 2007(1)⑀⏇Least fuel efficient vehicles comprised less than 10% of
all vehicles sold⑀⏇Full-size SUV’s and trucks sold for 52% of contract balance
vs. 45% for other vehicles25%5%3%6%34%14%11%2%Compact
CarFull-size CarFull-size SUVFull-size TruckMid-size CarMid-size SUVMid-size
TruckSports Car(1)For CPS portfolio.
Summary
Balance Sheets ($
in millions) March
31, 2007 December 31, 2006 December 31, 2005 Assets $ 14.2 193.0 1,401.4
Residual interest in securitizations 10.6 13.8 25.2 54.7 51.2 $1,728.3 $ 20.6
73.0 Income taxes payable 12.4 10.3 --- 1,817.9 1,616.8 1,081.6 31.4 1,443.0
38.6 111.5 $1,728.3 Cash $ 10.4 $ 17.8 Restricted Cash 236.2 157.7 Finance
receivables, net of allowance 1,569.5 913.6 Deferred tax assets, net 55.9 7.5
Other Assets 49.4 33.4 $1,932.0 $1,155.1 Liabilities Other debt 42.7 58.7
Shareholders’ equity 114.1 73.6 Accounts payable and other liabilities $ 18.7 $
19.8 Warehouse lines of credit 128.2 35.4 Residual interest financing 28.2
43.7
Securitization trust debt 1,587.7 924.0 $1,932.0 $1,155.1
Summary
Statements of Operations Three Months Ended Years Ended ($
in millions) March
31, 2007 $ 80.5 0.3 5.7 86.5 10.8 11.3 29.5 29.5 81.1 5.4 2.2 $ 3.2 $0.14 $0.14
EPS (fully diluted) $0.07 $1.64 $0.14 March 31, 2006 December 31, 2006 December
31, 2005 Revenues $ 263.6 2.9 12.4 278.9 38.5 42.0 93.1 92.1 265.7 13.2 (26.4)
$
39.6 $0.55 Interest income $ 54.5 $ 171.8 Servicing fees 1.0 6.6 Other income
2.5 15.2 58.0 193.7 Expenses Employee costs 9.4 40.4 Pretax income (loss) 1.8
3.4 Income tax expense (gain) 0 0 General and administrative 9.7 39.3 Interest
18.0 51.7 Provision for credit losses 19.1 59.0 56.2 190.3 Net income (loss)
$
1.8 $ 3.4 EPS (fully diluted) without tax gain $0.07 $0.14
Selected
Financial Data ($
in millions) Three
Months Ended March 31, 2007 $330.3 $1,727.7 $21.5 $22.1 5.30% 1.30% 3.55% 5.12%
March 31, 2006 December 31, 2006 December 31, 2005 December 31, 2004 $254.5
$1,240.0 $17.4 $19.1 6.41% 0.60% 2.73% 4.83% Auto contract purchases $1,019.0
$691.3$447.2 Total managed portfolio Risk-adjusted margin (1) Core operating
expenses (2) $ amount % of average managed portfolio 5.8% 8.0%8.4% Return on
managed assets (3) Total delinquencies and repo inventory (30+ days) (% of
total
owned portfolio) Annualized net charge-offs (% of average owned portfolio)
Years
Ended $1,565.9 $1,121.7 $906.9 $78.4 $61.2 $41.1 $79.7 0.34% 5.0% 5.3% $80.5
$72.1 0.96% NMF 4.5% 7.8% 5.5% 5.6% (1)Interest income less interest expense
and
provision for credit losses. (2)Total expenses less provision for credit losses
less interest expense and impairment loss on residual asset. (3)Pretax income
divided by average managed portfolio.
Investment
Merits ⑀⏇CPS has weathered industry turbulence to remain one of the few
independent public auto finance companies ⑀⏇Attractive industry fundamentals
⑀⏇Disciplined approach to credit quality and servicing ⑀⏇Demonstrated growth in
new contract acquisitions and total managed portfolio
Investment
Merits ⑀⏇Recurring revenue model and sound quality of earnings ⑀⏇Operating
leverage through economies of scale ⑀⏇Opportunistic, successful acquisitions
⑀⏇Stable senior management team with significant equity ownership -senior
management, including vice presidents, average 12 years of service with the
Company
Consumer
Portfolio Services, Inc. Nasdaq: CPSS
