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CPS Announces Third Quarter 2018 Earnings

  • Pretax income of $4.7 million
  • Net income of $3.2 million, or $0.13 per diluted share
  • New contract purchases of $225 million

LAS VEGAS, NV, Oct. 17, 2018 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $3.2 million, or $0.13 per diluted share, for its third quarter ended September 30, 2018. This compares to net income of $4.7 million, or $0.17 per diluted share, in the third quarter of 2017. 

Revenues for the third quarter of 2018 were $95.6 million, a decrease of $13.9 million, or 12.7%, compared to $109.5 million for the third quarter of 2017.  Total operating expenses for the third quarter of 2018 were $90.9 million compared to $101.4 million for the 2017 period.  Pretax income for the third quarter of 2018 was $4.7 million compared to pretax income of $8.1 million in the third quarter of 2017, a decrease of 42.0%.

For the nine months ended September 30, 2018 total revenues were $298.6 million compared to $327.2 million for the nine months ended September 30, 2017, a decrease of approximately $28.6 million, or 8.7%.  Total expenses for the nine months ended September 30, 2018 were $284.6 million, a decrease of $18.7 million, or 6.2%, compared to $303.3 million for the nine months ended September 30, 2017.  Pretax income for the nine months ended September 30, 2018 was $13.9 million, compared to $23.9 million for the nine months ended September 30, 2017.  Net income for the nine months ended September 30, 2018 was $9.5 million compared to $13.7 million for the nine months ended September 30, 2017. 

During the third quarter of 2018, CPS purchased $225.2 million of new contracts compared to $214.7 million during the second quarter of 2018 and $204.7 million during the third quarter of 2017.  The Company's receivables totaled $2.343 billion as of September 30, 2018, an increase from $2.329 billion as of June 30, 2018 and a decrease from $2.346 billion as of September 30, 2017.

Annualized net charge-offs for the third quarter of 2018 were 8.03% of the average portfolio as compared to 7.96% for the third quarter of 2017.  Delinquencies greater than 30 days (including repossession inventory) were 11.58% of the total portfolio as of September 30, 2018, as compared to 10.27% as of September 30, 2017.

We are pleased to record our 28th consecutive quarter of pre-tax earnings,” said Charles E. Bradley, Jr.  “In addition, in July we priced our third quarter securitization at the second-tightest spreads over the benchmarks since 2011, indicating continued high demand for our securitization bonds.”

Conference Call

CPS announced that it will hold a conference call on Thursday, October 18, 2018, 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 7899309.

A replay of the conference call will be available between October 18, 2018 and October 25, 2018, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 7899309.  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.

Investor Relations Contact

Jeffrey P. Fritz, Chief Financial Officer
844 878-2777

             
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,   
        2018         2017         2018         2017    
Revenues:                          
Interest income     $   93,617       $   107,014       $   291,535       $   319,074    
Other income         2,014           2,474           7,022           8,084    
          95,631           109,488           298,557           327,158    
Expenses:                          
Employee costs         18,806           18,455           59,288           53,807    
General and administrative         7,784           6,355           22,730           20,096    
Interest         25,808           23,317           75,057           68,641    
Provision for credit losses         31,959           47,336           107,997           143,053    
Other expenses         6,568           5,916           19,566           17,707    
          90,925           101,379           284,638           303,304    
Income before income taxes         4,706           8,109           13,919           23,854    
Income tax expense         1,508           3,446           4,409           10,138    
  Net income      $   3,198       $   4,663       $   9,510       $   13,716    
                           
Earnings per share:                          
  Basic     $   0.14       $   0.21       $   0.44       $   0.60    
  Diluted     $   0.13       $   0.17       $   0.38       $   0.50    
                           
                           
Number of shares used in computing earnings                          
  per share:                          
  Basic       22,636         22,473         21,800         23,019    
  Diluted       24,735         26,779         25,178         27,606    
                           
                           
Condensed Consolidated Balance Sheets            
(In thousands)            
(Unaudited)            
                           
                           
      September 30,     December 31,              
        2018         2017                
Assets:                          
Cash and cash equivalents     $   10,537       $   12,731                
Restricted cash and equivalents       110,473         111,965                
Total cash and cash equivalents       121,010         124,696                
                           
Finance receivables       1,697,841         2,304,984                
Allowance for finance credit losses       (82,472 )       (109,187 )              
Finance receivables, net       1,615,369         2,195,797                
                           
Finance receivables measured at fair value       614,807           -                 
Deferred tax assets, net       28,686         32,446                
Other assets       63,698         71,902                
      $   2,443,570       $   2,424,841                
                           
Liabilities and Shareholders' Equity:                          
Accounts payable and accrued expenses     $   33,324       $   28,715                
Warehouse lines of credit       127,695         112,408                
Residual interest financing       39,013           -                 
Securitization trust debt       2,034,281         2,083,215                
Subordinated renewable notes       16,948         16,566                
        2,251,261         2,240,904                
                           
Shareholders' equity       192,309         183,937                
      $   2,443,570       $   2,424,841                
                           
                           
Operating and Performance Data ($ in millions)                          
                           
                     
       At and for the       At and for the   
       Three months ended       Nine months ended   
       September 30,       September 30,   
        2018         2017         2018         2017    
                           
Contracts purchased     $   225.24       $   204.74       $   650.58       $   668.28    
Contracts securitized         239.87           230.00           638.45           670.00    
                           
Total portfolio balance     $   2,342.89       $   2,346.00       $   2,342.89       $   2,346.00    
Average portfolio balance         2,334.90           2,344.96           2,332.26           2,332.33    
                           
Allowance for finance credit losses as % of fin. receivables       4.86 %       4.69 %              
                           
Aggregate allowance as % of fin. receivables (1)       6.11 %       5.59 %              
                           
Delinquencies                          
31+ Days       10.13 %       8.90 %              
Repossession Inventory       1.45 %       1.37 %              
Total Delinquencies and Repo. Inventory       11.58 %       10.27 %              
                           
Annualized net charge-offs as % of average portfolio       8.03 %       7.96 %       7.92 %       7.83 %  
                           
Recovery rates (2)       34.8 %       34.6 %       34.5 %       35.2 %  
                           
       For the     For the 
       Three months ended     Nine months ended 
       September 30,     September 30, 
        2018       2017       2018       2017  
        $ (3)   % (4)     $ (3)   % (4)     $ (3)   % (4)     $ (3)   % (4)
Interest income     $   93.62   16.0 %   $   107.01   18.3 %   $   291.54   16.7 %   $   319.07   18.2 %
Servicing fees and other income         2.01   0.3 %       2.47   0.4 %       7.02   0.4 %       8.08   0.5 %
Interest expense         (25.81 ) -4.4 %       (23.32 ) -4.0 %       (75.06 ) -4.3 %       (68.64 ) -3.9 %
Net interest margin          69.82   12.0 %       86.17   14.7 %       223.50   12.8 %       258.52   14.8 %
Provision for credit losses         (31.96 ) -5.5 %       (47.34 ) -8.1 %       (108.00 ) -6.2 %       (143.05 ) -8.2 %
Risk adjusted margin         37.86   6.5 %       38.84   6.6 %       115.50   6.6 %       115.46   6.6 %
Core operating expenses         (33.16 ) -5.7 %       (30.73 ) -5.2 %       (101.58 ) -5.8 %       (91.61 ) -5.2 %
Pre-tax income     $   4.71   0.8 %   $   8.11   1.4 %   $   13.92   0.8 %   $   23.85   1.4 %
                           
                           
(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.            
                           

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