Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the
“Company”) today announced earnings of $13.7 million, or $0.52 per
diluted share, for its third quarter ended September 30, 2021. This
compares to net income of $3.8 million, or $0.16 per diluted share,
in the third quarter of 2020.
Revenues for the third quarter of 2021 were
$68.6 million, compared to $70.7 million for the third quarter of
2020. Total operating expenses for the third quarter of 2021 were
$49.0 million compared to $64.8 million for the 2020 period for a
decrease of $15.8 million, or 24.3%. Pretax income for
the third quarter of 2021 was $19.5 million compared to pretax
income of $5.9 million in the third quarter of 2020, an increase of
$13.7 million.
For the nine months ended September 30, 2021
total revenues were $198.4 million compared to $208.7 million for
the nine months ended September 30, 2020, a decrease of
approximately $10.3 million, or 4.9%. Total expenses for the nine
months ended September 30, 2021 were $157.1 million, a decrease of
$38.0 million, or 19.5%, compared to $195.1 million for the nine
months ended September 30, 2020. Pretax income for the nine months
ended September 30, 2021 was $41.4 million, compared to $13.6
million for the nine months ended September 30, 2020, an increase
of $27.7 million. Net income for the nine months ended September
30, 2021 was $28.6 million compared to $17.5 million for the nine
months ended September 30, 2020. Results for the nine months ended
September 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 nine months ended September
30, 2020 would have been $8.7 million and $0.37 per share,
respectively.
During the third quarter of 2021, CPS purchased
$326.8 million of new contracts compared to $286.0 million during
the second quarter of 2021 and $174.0 million during the third
quarter of 2020. The Company's receivables totaled $2.161 billion
as of September 30, 2021, an increase from $2.116 billion as of
June 30, 2021 and a decrease from $2.250 billion as of September
30, 2020.
Annualized net charge-offs for the third quarter
of 2021 were 2.82% of the average portfolio as compared to 6.39%
for the third quarter of 2020. Delinquencies greater than 30 days
(including repossession inventory) were 9.44% of the total
portfolio as of September 30, 2021, as compared to 10.29% as of
September 30, 2020.
On October 20, 2021, the Company purchased
1,999,995 shares of its stock for a purchase price of $12.5
million. The shares were acquired by the seller in 2018 upon the
exercise of a warrant that the Company issued to its lender upon
the 2008 amendment and partial repayment of outstanding debt under
a residual interest financing. The shares purchased, which
represent approximately 8.7% of the common shares outstanding prior
to the transaction, have been cancelled and
retired.
“We are pleased with our results for the third
quarter,” said Charles E. Bradley, President and Chief Executive
Officer. “We originated $327 million of new receivables in the
quarter, our second highest total ever. Investments in our
servicing platform have led to some of the best credit performance
metrics in our history. In addition, after the quarter ended, we
made a significant commitment to our shareholders by repurchasing
approximately two million shares of our stock.”
Conference Call
CPS announced that it will hold a conference
call on Thursday, October 28, 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 9262788.
A replay of the conference call will be available between
October 28th and November 4th, beginning two hours after conclusion
of the call, by dialing 855 859-2056 or 404 537-3406 for
international participants, with conference identification number
9262788. 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 COVID-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 |
|
|
Nine months
ended |
|
|
|
|
September 30, |
|
|
September 30, |
|
|
|
|
|
2021 |
|
|
|
|
2020 |
|
|
|
|
2021 |
|
|
|
|
2020 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
$ |
67,018 |
|
|
|
$ |
72,582 |
|
|
|
$ |
198,551 |
|
|
|
$ |
227,271 |
|
|
Mark to finance receivables measured at fair value |
|
- |
|
|
|
|
(3,152) |
|
|
|
|
(4,417) |
|
|
|
|
(23,051) |
|
|
Other
income |
|
|
|
1,547 |
|
|
|
|
1,239 |
|
|
|
|
4,312 |
|
|
|
|
4,508 |
|
|
|
|
|
|
68,565 |
|
|
|
|
70,669 |
|
|
|
|
198,446 |
|
|
|
|
208,728 |
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
costs |
|
|
|
18,170 |
|
|
|
|
19,155 |
|
|
|
|
57,777 |
|
|
|
|
60,826 |
|
|
General and
administrative |
|
|
|
7,455 |
|
|
|
|
7,846 |
|
|
|
|
23,034 |
|
|
|
|
24,352 |
|
|
Interest |
|
|
|
18,334 |
|
|
|
|
24,901 |
|
|
|
|
58,260 |
|
|
|
|
78,377 |
|
|
Provision
for credit losses |
|
|
|
(1,590) |
|
|
|
|
7,400 |
|
|
|
|
(1,590) |
|
|
|
|
14,113 |
|
|
Other
expenses |
|
|
|
6,649 |
|
|
|
|
5,478 |
|
|
|
|
19,599 |
|
|
|
|
17,416 |
|
|
|
|
|
|
49,018 |
|
|
|
|
64,780 |
|
|
|
|
157,080 |
|
|
|
|
195,084 |
|
|
Income
before income taxes |
|
|
|
19,547 |
|
|
|
|
5,889 |
|
|
|
|
41,366 |
|
|
|
|
13,644 |
|
|
Income tax
expense |
|
|
|
5,864 |
|
|
|
|
2,121 |
|
|
|
|
12,807 |
|
|
|
|
(3,888) |
|
|
Net income |
|
|
$ |
13,683 |
|
|
|
$ |
3,768 |
|
|
|
$ |
28,559 |
|
|
|
$ |
17,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.59 |
|
|
|
$ |
0.17 |
|
|
|
$ |
1.25 |
|
|
|
$ |
0.77 |
|
|
Diluted |
|
|
$ |
0.52 |
|
|
|
$ |
0.16 |
|
|
|
$ |
1.12 |
|
|
|
$ |
0.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
shares used in computing earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
23,011 |
|
|
|
|
22,666 |
|
|
|
|
22,866 |
|
|
|
|
22,630 |
|
|
Diluted |
|
|
|
26,218 |
|
|
|
|
23,908 |
|
|
|
|
25,439 |
|
|
|
|
23,825 |
|
|
Condensed
Consolidated Balance Sheets |
|
(In
thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
28,799 |
|
|
|
$ |
13,466 |
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
cash and equivalents |
|
|
|
144,966 |
|
|
|
|
130,686 |
|
|
|
|
|
|
|
|
|
|
|
|
Finance
receivables measured at fair value |
|
|
|
1,667,193 |
|
|
|
|
1,523,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
receivables |
|
|
|
282,640 |
|
|
|
|
492,133 |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for finance credit losses |
|
|
|
(68,724) |
|
|
|
|
(80,790) |
|
|
|
|
|
|
|
|
|
|
|
|
Finance
receivables, net |
|
|
|
213,916 |
|
|
|
|
411,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
assets, net |
|
|
|
24,100 |
|
|
|
|
28,512 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets |
|
|
|
27,625 |
|
|
|
|
38,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,106,599 |
|
|
|
$ |
2,145,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
|
$ |
51,921 |
|
|
|
$ |
43,112 |
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse
lines of credit |
|
|
|
97,768 |
|
|
|
|
118,999 |
|
|
|
|
|
|
|
|
|
|
|
|
Residual
interest financing |
|
|
|
64,589 |
|
|
|
|
25,426 |
|
|
|
|
|
|
|
|
|
|
|
|
Securitization trust debt |
|
|
|
1,703,465 |
|
|
|
|
1,803,673 |
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated
renewable notes |
|
|
|
27,462 |
|
|
|
|
21,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,945,205 |
|
|
|
|
2,012,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
161,394 |
|
|
|
|
133,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,106,599 |
|
|
|
$ |
2,145,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
and Performance Data ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At and for the |
|
|
At and for the |
|
|
|
|
Three months
ended |
|
|
Nine months
ended |
|
|
|
|
September 30, |
|
|
September 30, |
|
|
|
|
|
2021 |
|
|
|
|
2020 |
|
|
|
|
2021 |
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracts
purchased |
|
|
$ |
326.85 |
|
|
|
$ |
174.02 |
|
|
|
$ |
818.34 |
|
|
|
$ |
575.88 |
|
|
Contracts
securitized |
|
|
|
300.00 |
|
|
|
|
260.00 |
|
|
|
|
785.00 |
|
|
|
|
741.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
portfolio balance |
|
|
$ |
2,161.50 |
|
|
|
$ |
2,250.39 |
|
|
|
$ |
2,161.50 |
|
|
|
$ |
2,250.39 |
|
|
Average
portfolio balance |
|
|
|
2,142.96 |
|
|
|
|
2,270.55 |
|
|
|
|
2,133.43 |
|
|
|
|
2,353.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for finance credit losses as % of fin. receivables |
|
|
|
24.32% |
|
|
|
|
16.32% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
allowance as % of fin. receivables (1) |
|
|
|
24.76% |
|
|
|
|
18.02% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
31+
Days |
|
|
|
8.44% |
|
|
|
|
8.85% |
|
|
|
|
|
|
|
|
Repossession Inventory |
|
|
|
1.00% |
|
|
|
|
1.44% |
|
|
|
|
|
|
|
|
Total
Delinquencies and Repo. Inventory |
|
|
|
9.44% |
|
|
|
|
10.29% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized
Net Charge-offs as % of Average Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy
portfolio |
|
|
|
3.75% |
|
|
|
|
14.09% |
|
|
|
|
7.06% |
|
|
|
|
12.20% |
|
|
Fair Value
portfolio |
|
|
|
2.67% |
|
|
|
|
3.46% |
|
|
|
|
3.16% |
|
|
|
|
4.54% |
|
|
Total
portfolio |
|
|
|
2.82% |
|
|
|
|
6.39% |
|
|
|
|
3.85% |
|
|
|
|
6.93% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
rates (2) |
|
|
|
56.5% |
|
|
|
|
45.1% |
|
|
|
|
52.2% |
|
|
|
|
37.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the |
|
For the |
|
|
|
Three months
ended |
|
Nine months
ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
$ (3) |
|
% (4) |
|
|
|
$ (3) |
|
% (4) |
|
|
|
$ (3) |
|
% (4) |
|
|
|
$ (3) |
|
% (4) |
|
Interest income |
|
|
$ |
67.02 |
|
12.5% |
|
|
$ |
72.58 |
|
12.8% |
|
|
$ |
198.55 |
|
12.4% |
|
|
$ |
227.27 |
|
12.9% |
|
Mark to finance receivables measured at fair value |
|
- |
|
0.0% |
|
|
|
(3.15) |
|
-0.6% |
|
|
|
(4.42) |
|
-0.3% |
|
|
|
(23.05) |
|
-1.3% |
|
Other
income |
|
|
|
1.55 |
|
0.3% |
|
|
|
1.24 |
|
0.2% |
|
|
|
4.31 |
|
0.3% |
|
|
|
4.51 |
|
0.3% |
|
Interest
expense |
|
|
|
(18.33) |
|
-3.4% |
|
|
|
(24.90) |
|
-4.4% |
|
|
|
(58.26) |
|
-3.6% |
|
|
|
(78.38) |
|
-4.4% |
|
Net interest
margin |
|
|
|
50.23 |
|
9.4% |
|
|
|
45.77 |
|
8.1% |
|
|
|
140.19 |
|
8.8% |
|
|
|
130.35 |
|
7.4% |
|
Provision
for credit losses |
|
|
|
1.59 |
|
0.3% |
|
|
|
(7.40) |
|
-1.3% |
|
|
|
1.59 |
|
0.1% |
|
|
|
(14.11) |
|
-0.8% |
|
Risk
adjusted margin |
|
|
|
51.82 |
|
9.7% |
|
|
|
38.37 |
|
6.8% |
|
|
|
141.78 |
|
8.9% |
|
|
|
116.24 |
|
6.6% |
|
Core
operating expenses |
|
|
|
(32.27) |
|
-6.0% |
|
|
|
(32.48) |
|
-5.7% |
|
|
|
(100.41) |
|
-6.3% |
|
|
|
(102.59) |
|
-5.8% |
|
Pre-tax
income |
|
|
$ |
19.55 |
|
3.6% |
|
|
$ |
5.89 |
|
1.0% |
|
|
$ |
41.37 |
|
2.6% |
|
|
$ |
13.64 |
|
0.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
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