Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the
“Company”) today announced earnings of $3.0 million, or $0.13 per
diluted share, for its second quarter ended June 30, 2020. This
compares to net income of $1.8 million, or $0.08 per diluted share,
in the second quarter of 2019.
Revenues for the second quarter of 2020 were
$67.3 million, a decrease of $19.0 million, or 22.0%, compared to
$86.3 million for the second quarter of 2019. Total operating
expenses for the second quarter of 2020 were $62.6 million compared
to $83.6 million for the 2019 period for a decrease of $20.9
million, or 25.0%. Pretax income for the second quarter of
2020 was $4.6 million compared to pretax income of $2.8 million in
the second quarter of 2019, an increase of 67.6%.
Results for the second quarter include two
specific charges related to estimated potential impact on credit
performance resulting from the pandemic. The Company recorded
a $9.5 million mark down to the carrying value of the portion of
the receivables portfolio accounted for at fair value. The
mark down is reflected as a reduction in revenue for the
quarter. The Company also recorded a $3.1 million charge to
the provision for credit losses for the legacy portfolio accounted
for under the Current Expected Credit Loss (CECL) model.
Without the charges related to the pandemic, revenues, total
operating expenses and pretax income for the second quarter of 2020
would have been $76.8 million, $59.5 million and $17.3 million,
respectively.
For the six months ended June 30, 2020 total
revenues were $138.1 million compared to $174.6 million for the six
months ended June 30, 2019, a decrease of approximately $36.5
million, or 20.9%. Total expenses for the six months ended
June 30, 2020 were $130.3 million, a decrease of $38.8 million, or
23.0%, compared to $169.1 million for the six months ended June 30,
2019. Pretax income for the six months ended June 30, 2020
was $7.8 million, compared to $5.4 million for the six months ended
June 30, 2019. Net income for the six months ended June 30,
2020 was $13.8 million compared to $3.5 million for the six months
ended June 30, 2019. Results for the six months ended June 30, 2020
include a net tax benefit of $8.8 million related to the
revaluation of the Company’s net operating losses and other tax
adjustments. Without this tax benefit, net income and net income
per diluted share for the six months ended June 30, 2020 would have
been $5.0 million and $0.21 per share, respectively.
During the second quarter of 2020, CPS purchased
$135.9 million of new contracts compared to $266.0 million during
the first quarter of 2020 and $250.1 million during the second
quarter of 2019. The Company's receivables totaled $2.326
billion as of June 30, 2020, a decrease from $2.435 billion as of
March 31, 2020 and $2.399 billion as of June 30, 2019.
Annualized net charge-offs for the second
quarter of 2020 were 7.39% of the average portfolio as compared to
7.82% for the second quarter of 2019. Delinquencies greater
than 30 days (including repossession inventory) were 9.59% of the
total portfolio as of June 30, 2020, as compared to 14.83% as of
June 30, 2019.
“We began our second quarter of 2020 with many
uncertainties related to the pandemic,” reported Charles E.
Bradley, Jr., Chairman and Chief Executive Officer. “During
the quarter, we sent home, and later returned to the office, more
than half of our workforce with no significant interruption to our
operations or the services we provide our dealers and
customers. We postponed our planned asset-backed
securitization, then completed it when the markets recovered.
Despite the challenges of the times, we are pleased with the
resiliency of our staff, our customers and the subprime auto
finance industry.”
Conference
Call
CPS announced that it will hold a conference
call on Wednesday, July 22, 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 9486817.
A replay of the conference call will be
available between July 22 and July 29, beginning two hours after
conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for
international participants, with conference identification number
9486817. 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 figures representing allowances for
remaining expected lifetime credit losses, its pandemic-related
markdown of carrying value for the portion of its portfolio
accounted for at fair value, its pandemic-related charge to the
provision for credit losses for the its legacy portfolio, its
estimates of fair value (most significantly for its receivables
accounted for at fair value), its provision for credit losses, its
entries offsetting the preceding, and figures derived from any of
the preceding. In each case, such figures are forward-looking
statements because they are dependent on the Company’s estimates of
losses to be incurred in the future. The accuracy of such estimates
may be adversely affected by various factors, which include (in
addition to risks relating to the COVD-19 pandemic and 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. The accuracy of such estimates
may also be affected by the effects of the COVID-19 pandemic and of
governmental responses to said pandemic, which have included
prohibitions on certain means of enforcement of receivables, and
may include additional restrictions, as yet unknown, in the future.
Any or 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 losses to be incurred in the future may affect
future performance.
Investor Relations Contact
Jeffrey P. Fritz, Chief Financial Officer844 878-2777
|
|
Consumer Portfolio Services, Inc. and
Subsidiaries |
Condensed Consolidated Statements of
Operations |
(In thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
June 30, |
|
|
June 30, |
|
|
|
2020 |
|
|
|
|
2019 |
|
|
|
|
2020 |
|
|
|
|
2019 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
75,552 |
|
|
|
$ |
84,449 |
|
|
|
$ |
154,689 |
|
|
|
$ |
170,294 |
|
Mark to finance receivables measured at fair value |
|
(9,549 |
) |
|
|
|
- |
|
|
|
|
(19,899 |
) |
|
|
|
- |
|
Other income |
|
|
1,289 |
|
|
|
|
1,876 |
|
|
|
|
3,269 |
|
|
|
|
4,261 |
|
|
|
|
67,292 |
|
|
|
|
86,325 |
|
|
|
|
138,059 |
|
|
|
|
174,555 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Employee costs |
|
|
19,828 |
|
|
|
|
19,706 |
|
|
|
|
41,671 |
|
|
|
|
38,779 |
|
General and administrative |
|
|
7,837 |
|
|
|
|
8,750 |
|
|
|
|
16,506 |
|
|
|
|
16,924 |
|
Interest |
|
|
26,485 |
|
|
|
|
27,703 |
|
|
|
|
53,476 |
|
|
|
|
54,993 |
|
Provision for credit losses |
|
|
3,100 |
|
|
|
|
20,489 |
|
|
|
|
6,713 |
|
|
|
|
44,445 |
|
Other expenses |
|
|
5,399 |
|
|
|
|
6,907 |
|
|
|
|
11,938 |
|
|
|
|
13,968 |
|
|
|
|
62,649 |
|
|
|
|
83,555 |
|
|
|
|
130,304 |
|
|
|
|
169,109 |
|
Income before income taxes |
|
|
4,643 |
|
|
|
|
2,770 |
|
|
|
|
7,755 |
|
|
|
|
5,446 |
|
Income tax expense |
|
|
1,671 |
|
|
|
|
970 |
|
|
|
|
(6,009 |
) |
|
|
|
1,907 |
|
Net income |
|
$ |
2,972 |
|
|
|
$ |
1,800 |
|
|
|
$ |
13,764 |
|
|
|
$ |
3,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.13 |
|
|
|
$ |
0.08 |
|
|
|
$ |
0.61 |
|
|
|
$ |
0.16 |
|
Diluted |
|
$ |
0.13 |
|
|
|
$ |
0.08 |
|
|
|
$ |
0.58 |
|
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in computing earnings |
|
|
|
|
|
|
|
|
|
|
|
per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
22,685 |
|
|
|
|
22,362 |
|
|
|
|
22,612 |
|
|
|
|
22,302 |
|
Diluted |
|
|
23,687 |
|
|
|
|
23,978 |
|
|
|
|
23,783 |
|
|
|
|
24,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
|
2019 |
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,475 |
|
|
|
$ |
5,295 |
|
|
|
|
|
|
|
Restricted cash and equivalents |
|
|
139,191 |
|
|
|
|
135,537 |
|
|
|
|
|
|
|
Finance receivables measured at fair value |
|
|
1,537,649 |
|
|
|
|
1,444,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance receivables |
|
|
669,772 |
|
|
|
|
897,530 |
|
|
|
|
|
|
|
Allowance for finance credit losses |
|
|
(98,602 |
) |
|
|
|
(11,640 |
) |
|
|
|
|
|
|
Finance receivables, net |
|
|
571,170 |
|
|
|
|
885,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net |
|
|
33,442 |
|
|
|
|
15,480 |
|
|
|
|
|
|
|
Other assets |
|
|
48,533 |
|
|
|
|
53,009 |
|
|
|
|
|
|
|
|
|
$ |
2,337,460 |
|
|
|
$ |
2,539,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
47,415 |
|
|
|
$ |
47,077 |
|
|
|
|
|
|
|
Warehouse lines of credit |
|
|
56,668 |
|
|
|
|
134,791 |
|
|
|
|
|
|
|
Residual interest financing |
|
|
37,544 |
|
|
|
|
39,478 |
|
|
|
|
|
|
|
Securitization trust debt |
|
|
2,051,172 |
|
|
|
|
2,097,728 |
|
|
|
|
|
|
|
Subordinated renewable notes |
|
|
19,580 |
|
|
|
|
17,534 |
|
|
|
|
|
|
|
|
|
|
2,212,379 |
|
|
|
|
2,336,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
125,081 |
|
|
|
|
202,641 |
|
|
|
|
|
|
|
|
|
$ |
2,337,460 |
|
|
|
$ |
2,539,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Performance Data ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At and for the |
|
|
At and for the |
|
|
Three months ended |
|
|
Six months ended |
|
|
June 30, |
|
|
June 30, |
|
|
|
2020 |
|
|
|
|
2019 |
|
|
|
|
2020 |
|
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracts purchased |
|
$ |
135.85 |
|
|
|
$ |
250.14 |
|
|
|
$ |
401.86 |
|
|
|
$ |
493.17 |
|
Contracts securitized |
|
|
221.87 |
|
|
|
|
230.00 |
|
|
|
|
481.87 |
|
|
|
|
495.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total portfolio balance |
|
$ |
2,326.44 |
|
|
|
$ |
2,399.22 |
|
|
|
$ |
2,326.44 |
|
|
|
$ |
2,399.22 |
|
Average portfolio balance |
|
|
2,364.03 |
|
|
|
|
2,398.92 |
|
|
|
|
2,395.11 |
|
|
|
|
2,395.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for finance credit losses as % of fin. receivables |
|
|
14.72 |
% |
|
|
|
2.77 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate allowance as % of fin. receivables (1) |
|
|
17.45 |
% |
|
|
|
4.66 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquencies |
|
|
|
|
|
|
|
|
|
|
|
31+ Days |
|
|
7.75 |
% |
|
|
|
13.15 |
% |
|
|
|
|
|
|
Repossession Inventory |
|
|
1.84 |
% |
|
|
|
1.68 |
% |
|
|
|
|
|
|
Total Delinquencies and Repo. Inventory |
|
|
9.59 |
% |
|
|
|
14.83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Net Charge-offs as % of Average Portfolio |
|
|
|
|
|
|
|
|
|
|
|
Legacy portfolio |
|
|
12.84 |
% |
|
|
|
12.24 |
% |
|
|
|
11.45 |
% |
|
|
|
11.87 |
% |
Fair Value portfolio |
|
|
4.95 |
% |
|
|
|
2.90 |
% |
|
|
|
5.09 |
% |
|
|
|
2.77 |
% |
Total portfolio |
|
|
7.39 |
% |
|
|
|
7.82 |
% |
|
|
|
7.19 |
% |
|
|
|
7.90 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery rates (2) |
|
|
34.0 |
% |
|
|
|
34.1 |
% |
|
|
|
35.1 |
% |
|
|
|
33.9 |
% |
|
|
For the |
|
For the |
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
$ (3) |
|
% (4) |
|
$ (3) |
|
% (4) |
|
$ (3) |
|
% (4) |
|
$ (3) |
|
% (4) |
Interest income |
|
$ |
75.55 |
|
|
12.8% |
|
$ |
84.45 |
|
|
14.1% |
|
$ |
154.69 |
|
|
12.9% |
|
$ |
170.29 |
|
|
14.2% |
Mark to finance receivables measured at fair value |
|
(9.55 |
) |
|
-1.6% |
|
|
- |
|
|
0.0% |
|
|
(19.90 |
) |
|
-1.7% |
|
|
- |
|
|
0.0% |
Servicing fees and other income |
|
|
1.29 |
|
|
0.2% |
|
|
1.88 |
|
|
0.3% |
|
|
3.27 |
|
|
0.3% |
|
|
4.26 |
|
|
0.4% |
Interest expense |
|
|
(26.49 |
) |
|
-4.5% |
|
|
(27.70 |
) |
|
-4.6% |
|
|
(53.48 |
) |
|
-4.5% |
|
|
(54.99 |
) |
|
-4.6% |
Net interest margin |
|
|
40.81 |
|
|
6.9% |
|
|
58.62 |
|
|
9.8% |
|
|
84.58 |
|
|
7.1% |
|
|
119.56 |
|
|
10.0% |
Provision for credit losses |
|
|
(3.10 |
) |
|
-0.5% |
|
|
(20.49 |
) |
|
-3.4% |
|
|
(6.71 |
) |
|
-0.6% |
|
|
(44.45 |
) |
|
-3.7% |
Risk adjusted margin |
|
|
37.71 |
|
|
6.4% |
|
|
38.13 |
|
|
6.4% |
|
|
77.87 |
|
|
6.5% |
|
|
75.12 |
|
|
6.3% |
Core operating expenses |
|
|
(33.06 |
) |
|
-5.6% |
|
|
(35.36 |
) |
|
-5.9% |
|
|
(70.12 |
) |
|
-5.9% |
|
|
(69.67 |
) |
|
-5.8% |
Pre-tax income |
|
$ |
4.64 |
|
|
0.8% |
|
$ |
2.77 |
|
|
0.5% |
|
$ |
7.76 |
|
|
0.6% |
|
$ |
5.45 |
|
|
0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 portfolio balance.
Percentages may not add due to rounding. |
Consumer Portfolio Servi... (NASDAQ:CPSS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Consumer Portfolio Servi... (NASDAQ:CPSS)
Historical Stock Chart
From Jul 2023 to Jul 2024