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) October 17, 2007
CONSUMER
PORTFOLIO SERVICES, INC.
(Exact
Name of Registrant as Specified in Charter)
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CALIFORNIA
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0-51027
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33-0459135
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(State
or Other Jurisdiction of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer Identification
No.)
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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):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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ITEM
2.02
RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The
information in this Item 2.02, and the related Exhibit 99.1, is being furnished
and shall not be deemed "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that Section. The information in this Current Report shall not be incorporated
by reference into any registration statement or other document pursuant to
the
Securities Act of 1933, as amended.
On
October 17, 2007, the registrant issued a news release announcing its earnings
for the quarter ended September 30, 2007. A copy of the release is attached
as
Exhibit 99.1. The registrant also announced that it will hold its regular
quarterly conference call on October 18, 2007, at 1:30 p.m. eastern time to
discuss its quarterly earnings. Those wishing to participate by telephone may
dial in at 973-582-2717 approximately 10 minutes prior to the scheduled
time.
ITEM
9.01
FINANCIAL STATEMENTS AND EXHIBITS.
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c)
Exhibits.
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Exhibit
Number
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Description
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99.1
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News
Release dated October 17, 2007
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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. | ||
| |
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| Dated: October 18, 2007 | By: | /s/ Jeffrey P. Fritz |
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Jeffrey
P. Fritz
Sr.
Vice President and Chief Financial
Officer
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Signing
on behalf of the registrant and
as principal financial officer
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EXHIBIT
INDEX
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Exhibit
Number
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Description
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99.1
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News
Release dated October 17, 2007
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EXHIBIT
99.1
 |
NEWS
RELEASE
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CONSUMER
PORTFOLIO SERVICES, INC. REPORTS
2007
THIRD QUARTER EARNINGS
IRVINE,
California, October 17, 2007 (BUSINESS WIRE) --
Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today
announced earnings for its third quarter ended September 30, 2007.
Pretax
income for the third quarter of 2007 increased to $6.3 million, compared to
pretax income of $4.3 million for the comparable quarter ended September 30,
2006. Net income for the quarter ended September 30, 2007 was $3.7 million,
or
$0.16 per diluted share, compared to net income of $4.3 million, or $0.18 per
diluted share, for the quarter ended September 30, 2006. Net income for the
third quarter of 2006 did not include a provision for income tax
expense.
For
the
three months ended September 30, 2007 total revenues increased approximately
$29.0 million, or 39.4%, to $102.8 million, compared to $73.7 million for the
three months ended September 30, 2006. Total operating expenses for the three
months ended September 30, 2007 were $96.4 million, an increase of $27.0
million, or 38.8%, as compared to $69.4 million for the three months ended
September 30, 2006.
Pretax
income for the nine months ended September 30, 2007 increased to $18.0 million,
compared to pretax income of $8.7 million for the nine months ended September
30, 2006. Net income for the nine months ended September 30, 2007 was $10.4
million, or $0.45 per diluted share, compared to net income of $8.7 million,
or
$0.36 per diluted share, for the nine months ended September 30, 2006. Net
income for the nine months ended September 30, 2006 did not include a provision
for income tax expense.
For
the
nine months ended September 30, 2007 total revenues increased approximately
$86.1 million, or 43.3%, to $285.0 million, compared to $199.0 million for
the
nine months ended September 30, 2006. Total operating expenses for the nine
months ended September 30, 2007 were $267.1 million, an increase of $76.8
million, or 40.3%, as compared to $190.3 million for the nine months ended
September 30, 2006.
During
the third quarter of 2007, CPS purchased $340.2 million of contracts from
dealers as compared to $346.0 million during the second quarter of 2007 and
$254.4 million during the third quarter of 2006. During the first three quarters
of 2007, CPS purchased $1,016.5 million of contracts from dealers as compared
to
$777.7 million during the first three quarters of 2006. 2007 contract purchases
represent an increase of 30.7% vs. the same period in 2006. The Company's
managed receivables totaled $2,053.1 million as of September 30, 2007, an
increase of $572.4 million, or 38.7%, from $1,480.7 million as of September
30,
2006, as follows ($ in millions):
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September
30, 2007
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September
30, 2006
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|||||
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Owned
by Consolidated Subsidiaries*
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$
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2,047.3
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$
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1,422.3
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|||
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Owned
by Non-Consolidated Subsidiaries
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5.1
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52.5
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|||||
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As
Third Party Servicer for SeaWest Financial
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0.8
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5.9
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|||||
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Total
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$
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2,053.1
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$
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1,480.7
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|||
*
Before
$149.9 million and $116.9 million of allowance for credit losses, deferred
acquisition fees and repossessed vehicles for 2007 and 2006, respectively.
In
addition, the Company continued its regular quarterly securitization program
with the September sale of $327.5 million of asset backed notes. As previously
announced, the quarterly transaction was executed with lower credit enhancement
requirements than the second quarter transaction. The Company also issued $60
million of two-year notes under a new $120 million revolving and term residual
interest financing facility.
Annualized
net charge-offs during the first nine month of 2007 were 4.95% of the average
owned portfolio as compared to 4.00% during the same period in 2006.
Delinquencies greater than 30 days (including repossession inventory) were
6.06%
of the total owned portfolio as of September 30, 2007 as compared to 4.97%
as of
September 30, 2006.
“We
are
pleased with another solid quarter both financially and operationally,” said
Charles E. Bradley, Jr., President and Chief Executive Officer. “In the third
quarter we achieved our 10th straight quarter of pretax income growth and were
able to navigate the turbulent capital markets to successfully close our regular
quarterly term securitization. Our volume of new contract purchases remained
strong and credit performance met our expectations.”
Conference
Call
CPS
announced that it will hold a conference call tomorrow, October 18, 2007, at
1:30 p.m. ET to discuss its quarterly earnings. Those wishing to participate
by
telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the
scheduled time.
A
replay
will be available between October 18, 2007 and October 25, 2007, beginning
one
hour after conclusion of the call, by dialing 877-519-4471 or 973-341-3080
for
international participants, with pin number 9337877. A broadcast of the
conference call will also be available live and for 30 days after the call
via
the Company’s web site at www.consumerportfolio.com
and at
www.streetevents.com.
About
Consumer Portfolio Services, Inc.
Consumer
Portfolio Services, Inc. is a specialty finance company engaged in purchasing
and servicing new and used retail automobile contracts originated primarily
by
franchised automobile dealerships and to a lesser extent by select independent
dealers of used automobiles in the United States. We serve as an alternative
source of financing for dealers, facilitating sales to sub-prime customers,
who
have limited credit history, low income or past credit problems and who
otherwise might not be able to obtain financing from traditional sources.
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 future 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 or the effects of recent changes in bankruptcy
law,
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 earnings, 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 provision
for
credit losses may affect future performance.
Investor
Relations Contact
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Robert
E. Riedl
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Consumer
Portfolio Services, Inc.
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949-753-6800
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Consumer
Portfolio Services, Inc. and Subsidiaries
Condensed
Consolidated Statements of Operations
(In
thousands, except per share data)
(Unaudited)
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Three
months ended
|
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Nine
months ended
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|||||||||||
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September
30,
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September
30,
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||||||||||||
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2007
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2006
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2007
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2006
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|||||||
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Revenues:
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|||||||||||||
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Interest
income
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$
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97,423
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$
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70,623
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$
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267,361
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$
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188,189
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|||||
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Servicing
fees
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274
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633
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668
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2,436
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|||||||||
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Other
income
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5,058
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2,457
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17,020
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8,344
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|||||||||
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102,755
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73,713
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285,049
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198,969
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||||||||||
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Expenses:
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|||||||||||||
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Employee
costs
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11,566
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9,273
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33,704
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28,349
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|||||||||
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General
and administrative
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6,335
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6,159
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18,386
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16,948
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|||||||||
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Interest
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36,382
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25,075
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99,600
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65,412
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|||||||||
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Provision
for credit losses
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36,300
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24,045
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98,458
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65,322
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|||||||||
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Other
expenses
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5,832
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4,896
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16,914
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14,256
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|||||||||
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96,415
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69,448
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267,062
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190,287
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||||||||||
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Income
before income taxes
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6,340
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4,265
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17,987
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8,682
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|||||||||
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Income
taxes
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2,663
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-
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7,591
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-
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|||||||||
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Net
income
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$
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3,677
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$
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4,265
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$
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10,396
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$
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8,682
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|||||
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Earnings
per share:
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|||||||||||||
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Basic
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$
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0.18
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$
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0.20
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$
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0.49
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$
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0.40
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|||||
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Diluted
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0.16
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0.18
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0.45
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0.36
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|||||||||
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Number
of shares used in computing earnings per
share:
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|||||||||||||
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Basic
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20,779
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21,840
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21,279
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21,804
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|||||||||
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Diluted
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22,438
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23,850
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23,184
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24,139
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|||||||||
Condensed
Consolidated Balance Sheets
(In
thousands)
(Unaudited)
|
September
30,
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December
31,
|
||||||
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2007
|
2006
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||||||
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Cash
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$
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16,907
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$
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14,215
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|||
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Restricted
cash
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258,060
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193,001
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|||||
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Total
Cash
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274,967
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207,216
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|||||
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Finance
receivables
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1,997,106
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1,480,794
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|||||
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Allowance
for finance credit losses
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(99,675
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)
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(79,380
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)
|
|||
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Finance
receivables, net
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1,897,431
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1,401,414
|
|||||
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Residual
interest in securitizations
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1,551
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13,795
|
|||||
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Other
assets
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119,636
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106,169
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|||||
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$
|
2,293,585
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$
|
1,728,594
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||||
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Accounts
payable and other liabilities
|
$
|
35,809
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$
|
31,185
|
|||
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Warehouse
lines of credit
|
79,185
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72,950
|
|||||
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Residual
interest financing
|
60,000
|
31,378
|
|||||
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Securitization
trust debt
|
1,984,023
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1,442,995
|
|||||
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Senior
secured debt
|
-
|
25,000
|
|||||
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Subordinated
debt
|
22,065
|
13,574
|
|||||
|
2,181,082
|
1,617,082
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||||||
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Shareholders'
equity
|
112,503
|
111,512
|
|||||
|
$
|
2,293,585
|
$
|
1,728,594
|
||||
|
Operating
and Performance Data ($ in thousands)
|
At
and for the
|
At
and for the
|
|||||||||||
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Three
months ended
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Nine
months ended
|
||||||||||||
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September
30,
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September
30,
|
||||||||||||
|
2007
|
2006
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2007
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2006
|
||||||||||
|
|
|
||||||||||||
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Contract
purchases
|
340,244
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254,425
|
1,016,547
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777,657
|
|||||||||
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Total
managed portfolio
|
2,053,135
|
1,480,682
|
2,053,135
|
1,480,682
|
|||||||||
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Average
managed portfolio
|
2,008,911
|
1,449,128
|
1,839,382
|
1,322,675
|
|||||||||
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Net
interest margin (1)
|
61,041
|
45,548
|
167,761
|
122,777
|
|||||||||
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Risk
adjusted margin (2)
|
24,741
|
21,503
|
69,303
|
57,455
|
|||||||||
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Core
operating expenses (3)
|
23,733
|
20,328
|
69,004
|
59,553
|
|||||||||
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Annualized
% of average managed portfolio
|
4.73
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%
|
5.61
|
%
|
5.00
|
%
|
6.00
|
%
|
|||||
|
Annualized
return on managed assets (4)
|
1.26
|
%
|
1.18
|
%
|
1.30
|
%
|
0.88
|
%
|
|||||
|
Allowance
as % of finance receivables
|
4.99
|
%
|
5.69
|
%
|
|||||||||
|
Delinquencies
|
|||||||||||||
|
31+
Days
|
4.61
|
%
|
3.65
|
%
|
|||||||||
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Repossession
Inventory
|
1.45
|
%
|
1.32
|
%
|
|||||||||
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Total
Delinquencies and Repossession Inventory
|
6.06
|
%
|
4.97
|
%
|
|||||||||
|
Annualized
net charge-offs as % of average owned portfolio
|
5.57
|
%
|
4.51
|
%
|
4.95
|
%
|
4.00
|
%
|
|||||
| (1) |
Interest
income less interest expense.
|
| (2) |
Net
interest margin less provision for credit
losses.
|
| (3) |
Total
expenses less interest and provision for credit
losses.
|
| (4) |
Pretax
income divided by average managed
portfolio.
|