CPS Announces Second Quarter 2013 Earnings
August 08 2013 - 7:53PM
- Pretax income of $8.5 million
- Net income of $4.8 million, or $0.15 per diluted share
- New contract purchases of $204 million
- Total managed portfolio increases to $1.067 billion from $969
million at March 31, 2013
Consumer Portfolio Services, Inc. (Nasdaq:CPSS) ("CPS" or the
"Company") today announced earnings of $4.8 million, or $0.15 per
diluted share, for its second quarter ended June 30, 2013. This
compares to net income of $1.3 million, or $0.05 per diluted share,
in the second quarter of 2012. Earnings for the first six months of
2013 were $8.6 million, or $0.27 per diluted share, as compared to
earnings of $1.9 million, or $0.08 per diluted share, for the same
period in 2012. The 2012 periods do not include a tax expense.
Revenues for the second quarter of 2013 were $70.5 million, an
increase of $26.3 million, or 60%, compared to $44.2 million for
the second quarter of 2012. Total operating expenses for the second
quarter of 2013 were $61.9 million, an increase of $19.1 million,
or 45%, compared to $42.8 million for the 2012 period. Pretax
income for the second quarter of 2013 was $8.5 million compared to
pretax income of $1.3 million in the second quarter of 2012.
For the six months ended June 30, 2013 total revenues were
$125.1 million compared to $88.7 million for the six months ended
June 30, 2012, an increase of approximately $36.4 million, or 41%.
Total expenses for the six months ended June 30, 2013 were $110.0
million, an increase of $23.2 million, or 27%, compared to $86.8
million for the six months ended June 30, 2012. Pretax income for
the six months ended June 30, 2013 was $15.1 million, compared to
$1.9 million for the six months ended June 30, 2012.
During the second quarter of 2013, CPS purchased $203.8 million
of new contracts compared to $180.1 million during the first
quarter of 2013 and $137.9 million during the second quarter of
2012. The Company's managed receivables totaled $1.067 billion as
of June 30, 2013, an increase from $968.5 million as of March 31,
2013 and $806.1 million as of June 30, 2012, as follows ($ in
millions):
Originating Entity |
June 30, 2013 |
March 31, 2013 |
June 30, 2012 |
CPS |
$1,030.5 |
$917.0 |
$681.5 |
Fireside Bank |
31.1 |
43.3 |
104.0 |
TFC |
-- |
-- |
0.6 |
As Third Party Servicer |
5.8 |
8.2 |
20.0 |
Total |
$1,067.4 |
$968.5 |
$806.1 |
Annualized net charge-offs for the second quarter of 2013 were
4.03% of the average owned portfolio as compared to 3.16% for the
2012 period. Delinquencies greater than 30 days (including
repossession inventory) were 5.16% of the total owned portfolio as
of June 30, 2013, as compared to 3.81% as of June 30, 2012.
As previously reported, during June CPS closed its second term
securitization transaction of 2013 and the ninth transaction since
April 2011. In the senior subordinate structure, a special purpose
subsidiary sold five tranches of asset-backed notes totaling $205.0
million. The notes are secured by automobile receivables purchased
by CPS and have a weighted average effective coupon of
approximately 2.34%. The transaction has initial credit enhancement
consisting of a cash deposit equal to 1.00% of the original
receivable pool balance. The final enhancement level requires
accelerated payment of principal on the notes to reach
overcollateralization of 11.50% of the then-outstanding receivable
pool balance.
"The second quarter of 2013 was another good quarter for CPS,"
said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.
"Our managed portfolio continues to grow as we purchase new
contracts with attractive yields and credit demographics. Asset
performance metrics, while higher year-over-year, are well within
our expectations as credit trends "normalize" after the very tight
lending period following the financial crisis. In addition, we
extended the revolving period of our second credit facility in June
for two years and added a one-year amortization period thereafter.
As a result, both of our credit facilities now have multi-year
revolving periods plus amortization periods. These features give us
considerably more financial flexibility across a variety of capital
markets environments."
Conference Call
CPS announced that it will hold a conference call on Friday,
August 9, 2013, at 3:00 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 August
9, 2013 and August 16, 2013, beginning two hours after conclusion
of the call, by dialing 855 859-2056 or 404 537-3406 for
international participants, with conference identification number
30267175. 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.
Consumer Portfolio
Services, Inc. and Subsidiaries |
Condensed Consolidated
Statements of Operations |
(In thousands, except
per share data) |
(Unaudited) |
|
|
|
|
|
|
Three months
ended |
Six month
ended |
|
June 30, |
June 30, |
|
2013 |
2012 |
2013 |
2012 |
Revenues: |
|
|
|
|
Interest income |
$ 55,797 |
$ 41,546 |
$ 106,964 |
$ 82,157 |
Servicing fees |
876 |
595 |
1,784 |
1,396 |
Other income |
2,862 |
2,010 |
5,380 |
5,116 |
Gain on cancellation of debt |
10,947 |
-- |
10,947 |
|
|
70,482 |
44,151 |
125,075 |
88,669 |
Expenses: |
|
|
|
|
Employee costs |
11,527 |
8,277 |
20,476 |
17,148 |
General and administrative |
4,518 |
3,577 |
8,272 |
8,075 |
Interest |
14,601 |
19,827 |
30,947 |
42,136 |
Provision for credit losses |
17,371 |
7,711 |
32,519 |
12,547 |
Provision for contingent liabilities |
9,650 |
-- |
9,650 |
-- |
Other expenses |
4,269 |
3,418 |
8,137 |
6,911 |
|
61,936 |
42,810 |
110,001 |
86,817 |
Income before income taxes |
8,546 |
1,341 |
15,074 |
1,852 |
Income tax expense |
3,721 |
-- |
6,464 |
-- |
Net income |
$ 4,825 |
$ 1,341 |
$ 8,610 |
$ 1,852 |
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$ 0.23 |
$ 0.07 |
$ 0.42 |
$ 0.10 |
Diluted |
$ 0.15 |
$ 0.05 |
$ 0.27 |
$ 0.08 |
|
|
|
|
|
|
|
|
|
|
Number of shares used in computing earnings
per share: |
|
|
|
|
Basic |
20,989 |
19,305 |
20,534 |
19,360 |
Diluted |
31,788 |
24,636 |
31,709 |
23,283 |
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated
Balance Sheets |
|
|
(In
thousands) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
December 31, |
|
|
|
2013 |
2012 |
|
|
Assets: |
|
|
|
|
Cash and cash equivalents |
$ 18,584 |
$ 12,966 |
|
|
Restricted cash and equivalents |
122,864 |
104,445 |
|
|
Total cash and cash equivalents |
141,448 |
117,411 |
|
|
|
|
|
|
|
Finance receivables |
971,914 |
764,343 |
|
|
Allowance for finance credit losses |
(32,101) |
(19,594) |
|
|
Finance receivables, net |
939,813 |
744,749 |
|
|
|
|
|
|
|
Finance receivables measured at fair
value |
30,319 |
59,668 |
|
|
Residual interest in securitizations |
2,246 |
4,824 |
|
|
Deferred tax assets, net |
69,971 |
75,640 |
|
|
Other assets |
41,243 |
35,328 |
|
|
|
$ 1,225,040 |
$ 1,037,620 |
|
|
|
|
|
|
|
Liabilities and Shareholders'
Equity: |
|
|
|
|
Accounts payable and accrued expenses |
$ 29,672 |
$ 17,785 |
|
|
Warehouse lines of credit |
17,144 |
21,731 |
|
|
Residual interest financing |
33,773 |
13,773 |
|
|
Debt secured by receivables measured at fair
value |
25,622 |
57,107 |
|
|
Securitization trust debt |
983,887 |
792,497 |
|
|
Senior secured debt, related party |
39,368 |
50,135 |
|
|
Subordinated renewable notes |
22,569 |
23,281 |
|
|
|
1,152,035 |
976,309 |
|
|
|
|
|
|
|
Shareholders' equity |
73,005 |
61,311 |
|
|
|
$ 1,225,040 |
$ 1,037,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Performance
Data ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At and for the |
|
At and for the |
|
|
Three months
ended |
|
Six months
ended |
|
|
June 30, |
|
June 30, |
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
Contracts purchased |
$ 203.78 |
|
$ 137.90 |
|
$ 383.90 |
|
$ 257.80 |
|
Contracts securitized |
209.64 |
|
140.41 |
|
370.90 |
|
285.20 |
|
|
|
|
|
|
|
|
|
|
Total managed portfolio |
$ 1,067.42 |
|
$ 806.14 |
|
$ 1,067.42 |
|
$ 806.14 |
|
Average managed portfolio |
1,034.57 |
|
795.31 |
|
989.31 |
|
789.26 |
|
|
|
|
|
|
|
|
|
|
Allowance for finance credit losses as % of
fin. receivables |
3.30% |
|
2.28% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate allowance as % of fin. receivables
(1) |
4.02% |
|
2.89% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquencies |
|
|
|
|
|
|
|
|
31+ Days |
3.82% |
|
2.64% |
|
|
|
|
|
Repossession Inventory |
1.34% |
|
1.17% |
|
|
|
|
|
Total Delinquencies and Repo. Inventory |
5.16% |
|
3.81% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized net charge-offs as % of average
owned portfolio |
4.03% |
|
3.16% |
|
4.12% |
|
3.53% |
|
|
|
|
|
|
|
|
|
|
Recovery rates (2) |
48.6% |
|
49.1% |
|
48.8% |
|
48.6% |
|
|
|
|
|
|
|
|
|
|
|
For the |
For the |
|
Three months
ended |
Six months
ended |
|
June 30, |
June 30, |
|
2013 |
2012 |
2013 |
2012 |
|
$ (3) |
% (4) |
$ (3) |
% (4) |
$ (3) |
% (4) |
$ (3) |
% (4) |
Interest income |
$ 55.80 |
21.6% |
$ 41.55 |
20.9% |
$ 106.96 |
21.6% |
$ 82.16 |
20.8% |
Servicing fees and other income |
3.74 |
1.4% |
2.61 |
1.3% |
7.16 |
1.4% |
6.51 |
1.7% |
Interest expense |
(14.60) |
-5.6% |
(19.83) |
-10.0% |
(30.95) |
-6.3% |
(42.14) |
-10.7% |
Net interest margin |
44.93 |
17.4% |
24.32 |
12.2% |
83.18 |
16.8% |
46.53 |
11.8% |
Provision for credit losses |
(17.37) |
-6.7% |
(7.71) |
-3.9% |
(32.52) |
-6.6% |
(12.55) |
-3.2% |
Risk adjusted margin |
27.56 |
10.7% |
16.61 |
8.4% |
50.66 |
10.2% |
33.99 |
8.6% |
Core operating expenses |
(20.31) |
-7.9% |
(15.27) |
-7.7% |
(36.89) |
-7.5% |
(32.13) |
-8.1% |
Provision for contingent liabilities |
(9.65) |
-3.7% |
-- |
0.0% |
(9.65) |
-2.0% |
-- |
0.0% |
Gain on cancellation of debt |
10.95 |
4.2% |
-- |
0.0% |
10.95 |
2.2% |
-- |
0.0% |
Pre-tax income |
$ 8.55 |
3.3% |
$ 1.34 |
0.7% |
$ 15.07 |
3.0% |
$ 1.85 |
0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes allowance for
finance credit losses and allowance for repossession
inventory. |
(2) Wholesale auction
liquidation amounts (net of expenses) for CPS portfolio 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. |
CONTACT: Investor Relations Contact
Robert E. Riedl, Chief Investment Officer
949 753-6800
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