CPSS Consumer Portfolio Services Inc

Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $4.1 million, or $0.17 per diluted share, for its fourth quarter ended December 31, 2020. This compares to a net income of $29,000 in the fourth quarter of 2019.

Revenues for the fourth quarter of 2020 were $62.4 million, a decrease of $23.3 million, or 27.2%, compared to $85.7 million for the fourth quarter of 2019. Total operating expenses for the fourth quarter of 2020 were $56.0 million compared to $84.8 million for the 2019 period.   Pretax income for the fourth quarter of 2020 was $6.5 million compared to pretax income of $0.9 million in the fourth quarter of 2019.

For the twelve months ended December 31, 2020 total revenues were $271.2 million compared to $345.8 million for the twelve months ended December 31, 2019, a decrease of approximately $74.6 million, or 21.6%. Total expenses for the twelve months ended December 31, 2020 were $251.0 million, a decrease of $85.6 million, or 25.4%, compared to $336.6 million for the twelve months ended December 31, 2019. Pretax income for the twelve months ended December 31, 2020 was $20.1 million, compared to $9.2 million for the twelve months ended December 31, 2019. Net income for the twelve months ended December 31, 2020 was $21.7 million, or $0.90 per diluted share. This compares to net income of $5.4 million, or $0.22 per diluted share for the twelve months ended December 31, 2019. Results for the twelve months ended December 31, 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 twelve months ended December 31, 2020 would have been $12.9 million and $0.54 per share, respectively.

During the fourth quarter of 2020, CPS purchased $166.7 million of new contracts compared to $174.0 million during the third quarter of 2020 and $247.5 million during the fourth quarter of 2019. The Company's receivables totaled $2.175 billion as of December 31, 2020, a decrease from $2.250 billion as of September 30, 2020 and a decrease from $2.416 billion as of December 31, 2019.

Annualized net charge-offs for the fourth quarter of 2020 were 5.18% of the average portfolio as compared to 7.92% for the fourth quarter of 2019. Delinquencies greater than 30 days (including repossession inventory) were 12.08% of the total portfolio as of December 31, 2020, as compared to 15.46% as of December 31, 2019.

“We began 2020 with the highest expectations and then adjusted to the changes brought about by the pandemic,” reported Charles E. Bradley, Jr., Chairman and Chief Executive Officer. “As the year unfolded, we experienced the interruption and return of the asset-backed securitization market, briefly higher delinquencies followed by improvement to even lower levels than before the pandemic, and the resilience and fortitude of our staff as we navigated work-from-home and enhanced office health protocols. We are looking forward to a return to pre-pandemic world in 2021.”

Conference Call

CPS announced that it will hold a conference call on February 24, 2021, 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 3998868.

A replay of the conference call will be available between February 24, 2021 and March 3, 2021, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 3998868. 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 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, yet unknown, in the future. Any or all 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												Twelve months ended
			December 31,												December 31,
				2020						2019						2020						2019
Revenues:
Interest income			$	67,710					$	83,274					$	294,982					$	337,096
Mark to finance receivables measured at fair value				(6,477	)					-						(29,528	)					-
Other income				1,201						2,449						5,707						8,704
				62,434						85,723						271,161						345,800
Expenses:
Employee costs				19,372						21,847						80,198						80,877
General and administrative				7,630						7,895						31,981						33,004
Interest				22,962						27,595						101,338						110,528
Provision for credit losses				-						21,454						14,113						85,773
Other expenses				5,996						6,045						23,411						26,456
				55,960						84,836						251,041						336,638
Income before income taxes				6,474						887						20,120						9,162
Income tax expense (benefit)				2,331						858						(1,557	)					3,756
Net income			$	4,143					$	29					$	21,677					$	5,406
Earnings per share:
Basic			$	0.18					$	0.00					$	0.96					$	0.24
Diluted			$	0.17					$	0.00					$	0.90					$	0.22
Number of shares used in computing earnings
per share:
Basic				22,555						22,529						22,611						22,416
Diluted				24,537						23,950						24,003						24,064
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
			December 31,						December 31,
				2020						2019
Assets:
Cash and cash equivalents			$	13,466					$	5,295
Restricted cash and equivalents				130,686						135,537
Finance receivables measured at fair value				1,523,726						1,444,038
Finance receivables				492,133						897,530
Allowance for finance credit losses				(80,790	)					(11,640	)
Finance receivables, net				411,343						885,890
Deferred tax assets, net				28,512						15,480
Other assets				38,162						53,009
			$	2,145,895					$	2,539,249
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses			$	43,112					$	47,077
Warehouse lines of credit				118,999						134,791
Residual interest financing				25,426						39,478
Securitization trust debt				1,803,673						2,097,728
Subordinated renewable notes				21,323						17,534
				2,012,533						2,336,608
Shareholders' equity				133,362						202,641
			$	2,145,895					$	2,539,249
Operating and Performance Data ($ in millions)
			At and for the												At and for the
			Three months ended												Twelve months ended
			December 31,												December 31,
				2020						2019						2020						2019
Contracts purchased			$	166.71					$	247.50					$	742.58					$	1,002.78
Contracts securitized				-						275.00						741.87						1,014.10
Total portfolio balance			$	2,174.97					$	2,416.04					$	2,174.97					$	2,416.04
Average portfolio balance				2,202.22						2,418.61						2,315.75						2,404.71
Allowance for finance credit losses as % of fin. receivables				16.42	%					1.30	%
Aggregate allowance as % of fin. receivables (1)				18.23	%					3.57	%
Delinquencies
31+ Days				10.43	%					13.55	%
Repossession Inventory				1.65	%					1.91	%
Total Delinquencies and Repo. Inventory				12.08	%					15.46	%
Annualized Net Charge-offs as % of Average Portfolio
Legacy portfolio				6.96	%					12.05	%					11.72	%					12.16	%
Fair Value portfolio				4.61	%					5.17	%					4.33	%					3.80	%
Total portfolio				5.18	%					7.92	%					6.51	%					7.95	%
Recovery rates (2)				41.9	%					33.1	%					38.7	%					33.9	%
			For the												For the
			Three months ended												Twelve months ended
			December 31,												December 31,
				2020						2019						2020						2019
			$	(3	)	% (4)			$	(3	)	% (4)			$	(3	)	% (4)			$	(3	)	% (4)
Interest income			$	67.71		12.3	%		$	83.27		13.8	%		$	294.98		12.7	%		$	337.10		14.0	%
Mark to finance receivables measured at fair value				(6.48	)	-1.2	%			-		0.0	%			(29.53	)	-1.3	%		$	-		0.0	%
Servicing fees and other income				1.20		0.2	%			2.45		0.4	%			5.71		0.2	%			8.70		0.4	%
Interest expense				(22.96	)	-4.2	%			(27.60	)	-4.6	%			(101.34	)	-4.4	%			(110.53	)	-4.6	%
Net interest margin				39.47		7.2	%			58.13		9.6	%			169.82		7.3	%			235.27		9.8	%
Provision for credit losses				-		0.0	%			(21.45	)	-3.5	%			(14.11	)	-0.6	%			(85.77	)	-3.6	%
Risk adjusted margin				39.47		7.2	%			36.67		6.1	%			155.71		6.7	%			149.50		6.2	%
Core operating expenses				(33.00	)	-6.0	%			(35.79	)	-5.9	%			(135.59	)	-5.9	%			(140.34	)	-5.8	%
Pre-tax income			$	6.47		1.2	%		$	0.89		0.1	%		$	20.12		0.9	%		$	9.16		0.4	%
(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.