UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 18, 2012
CONSUMER PORTFOLIO SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)
| CALIFORNIA | 1-11416 | 33-0459135 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 19500 Jamboree Road, Irvine, CA 92612 | ||
| (Address of Principal Executive Offices) (Zip Code) |
Registrant's telephone number, including area code (949) 753-6800
| Not Applicable | ||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 18, 2012, the registrant announced its earnings for the quarter ended June 30, 2012. A copy of the announcement is attached as an exhibit to this report.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
| (c) Exhibits. | |
| 99.1 News Release dated July 18, 2012. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CONSUMER PORTFOLIO SERVICES, INC. | ||
| Dated: July 18, 2012 | By: /s/ JEFFREY P. FRITZ | |
|
Jeffrey P. Fritz Senior Vice President and Chief Financial Officer Signing on behalf of the registrant | ||
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EXHIBIT 99.1
 |
NEWS RELEASE |
CPS ANNOUNCES SECOND QUARTER 2012 EARNINGS
| § | Net income of $1.3 million, or $0.05 per share |
| § | New contract purchases of $138 million |
| § | Total managed portfolio increases to $806 million from $782 million in March 2012 |
IRVINE, California, July 18, 2012 (GlobeNewswire) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $1.3 million, or $0.05 per diluted share, for its second quarter ended June 30, 2012. This compares to a net loss of $6.4 million, or $0.35 per diluted share, in the second quarter of 2011. Earnings for the first six months of 2012 were $1.9 million, or $0.08 per diluted share, as compared to a net loss of $10.6 million, or $0.58 per diluted share, for the same period in 2011.
Revenues for the second quarter of 2012 were $44.2 million, an increase of approximately $13.0 million, or 42%, compared to $31.2 million for the second quarter of 2011. Total operating expenses for the second quarter of 2012 were $42.8 million, an increase of $5.2 million, or 14%, compared to $37.6 million for the 2011 period. Pretax income for the second quarter of 2012 was $1.3 million compared to pretax loss of $6.4 million in the second quarter of 2011.
For the six months ended June 30, 2012 total revenues were $88.7 million compared to $63.5 million for the six months ended June 30, 2011, an increase of approximately $25.1 million, or 40%. Total expenses for the six months ended June 30, 2012 were $86.8 million, an increase of $12.6 million, or 17%, compared to $74.2 million for the six months ended June 30, 2011. Pretax income for the six months ended June 30, 2012 was $1.9 million, compared to pretax loss of $10.6 million for the six months ended June 30, 2011.
During the second quarter of 2012, CPS purchased $137.9 million of new contracts compared to $119.9 million during the first quarter of 2012 and $60.8 million during the second quarter of 2011. The Company's managed receivables totaled $806.1 million as of June 30, 2012, an increase from $781.8 million as of March 31, 2012 and $635.0 million as of June 30, 2011, as follows ($ in millions):
| Originating Entity | June 30, 2012 | March 31, 2012 | June 30, 2011 |
| CPS | $681.5 | $621.7 | $578.7 |
| Fireside Bank | 104.0 | 133.2 | 0.0 |
| TFC | 0.6 | 1.1 | 5.1 |
| As Third Party Servicer | 20.0 | 25.8 | 51.2 |
| Total | $806.1 | $781.8 | $635.0 |
Annualized net charge-offs for the second quarter of 2012 were 3.16% of the average owned portfolio as compared to 6.04% for the second quarter of 2011. Delinquencies greater than 30 days (including repossession inventory) were 3.81% of the total owned portfolio as of June 30, 2012, as compared to 5.92% as of June 30, 2011.
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During June, CPS closed its second term securitization transaction of 2012 and the fifth transaction in the last 15 months. In the senior subordinate structure, a special purpose subsidiary sold four tranches of asset-back notes totaling $141.5 million. The notes are secured by automobile receivables purchased by CPS and have a weighted average effective coupon of approximately 3.15%. 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 11.00% of the then-outstanding receivable pool balance.
"The second quarter of 2012 marks another milestone in our recovery from the financial crisis," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer. "We are now growing our total managed portfolio sequentially as our new contract purchases are more than offsetting the runoff of the Fireside Bank portfolio and our 2007 and 2008 vintages. As we can see from our financial results, the operating leverage inherent in our business is once again becoming evident. This bodes well for our future profitability.”
“Operationally, the second quarter was also solid. New contract purchases increased 15% from the first quarter and yields and credit demographics of the new paper remain attractive. Asset performance metrics continue to be very strong as well with year-over-year net charge-offs and delinquencies continuing to decline. In addition, we achieved another record low funding cost on our June securitization."
Conference Call
CPS announced that it will hold a conference call on Thursday, July 19, 2012, 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.
A replay will be available between July 19, 2012 and July 25, 2012, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 11952079. A broadcast of the conference call will also be available live and for 30 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.
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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 future 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 provision for credit losses may affect future performance.
Investor Relations Contact
Robert E. Riedl, Chief Investment Officer
949 753-6800
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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, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenues: | ||||||||||||||||
| Interest income | $ | 41,546 | $ | 27,812 | $ | 82,157 | $ | 56,396 | ||||||||
| Servicing fees | 595 | 1,130 | 1,396 | 2,545 | ||||||||||||
| Other income | 2,010 | 2,212 | 5,116 | 4,608 | ||||||||||||
| 44,151 | 31,154 | 88,669 | 63,549 | |||||||||||||
| Expenses: | ||||||||||||||||
| Employee costs | 8,277 | 7,461 | 17,148 | 15,085 | ||||||||||||
| General and administrative | 3,578 | 3,772 | 8,075 | 7,411 | ||||||||||||
| Interest | 19,827 | 19,241 | 42,136 | 38,367 | ||||||||||||
| Provision for credit losses | 7,711 | 4,360 | 12,547 | 8,052 | ||||||||||||
| Other expenses | 3,418 | 2,763 | 6,911 | 5,283 | ||||||||||||
| 42,811 | 37,597 | 86,817 | 74,198 | |||||||||||||
| Income (loss) before income taxes | 1,340 | (6,443 | ) | 1,852 | (10,649 | ) | ||||||||||
| Income taxes | — | — | — | — | ||||||||||||
| Net income (loss) | $ | 1,340 | $ | (6,443 | ) | $ | 1,852 | $ | (10,649 | ) | ||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | 0.07 | $ | (0.35 | ) | $ | 0.10 | $ | (0.58 | ) | ||||||
| Diluted | $ | 0.05 | (0.35 | ) | $ | 0.08 | (0.58 | ) | ||||||||
| Number of shares used in computing earnings (loss) | ||||||||||||||||
| per share: | ||||||||||||||||
| Basic | 19,305 | 18,421 | 19,360 | 18,272 | ||||||||||||
| Diluted | 24,636 | 18,421 | 23,283 | 18,272 | ||||||||||||
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Cash | $ | 10,240 | $ | 10,094 | ||||
| Restricted cash | 127,806 | 159,228 | ||||||
| Total Cash | 138,046 | 169,322 | ||||||
| Finance receivables | 618,802 | 516,630 | ||||||
| Allowance for finance credit losses | (14,093 | ) | (10,351 | ) | ||||
| Finance receivables, net | 604,709 | 506,279 | ||||||
| Finance receivables measured at fair value | 102,366 | 160,253 | ||||||
| Residual interest in securitizations | 4,850 | 4,414 | ||||||
| Deferred tax assets, net | 15,000 | 15,000 | ||||||
| Other assets | 37,220 | 34,782 | ||||||
| $ | 902,191 | $ | 890,050 | |||||
| Accounts payable and other liabilities | $ | 23,467 | $ | 27,993 | ||||
| Warehouse lines of credit | 28,568 | 25,393 | ||||||
| Residual interest financing | 15,321 | 21,884 | ||||||
| Debt secured by receivables measured at fair value | 104,662 | 166,828 | ||||||
| Securitization trust debt | 666,076 | 583,065 | ||||||
| Senior secured debt, related party | 53,711 | 58,344 | ||||||
| Subordinated debt | 21,100 | 20,750 | ||||||
| 912,905 | 904,257 | |||||||
| Shareholders' equity | (10,714 | ) | (14,207 | ) | ||||
| $ | 902,191 | $ | 890,050 | |||||
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Operating and Performance Data ($ in millions)
| At and for the | At and for the | |||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Contracts purchased | $ | 137.90 | $ | 60.81 | $ | 257.80 | $ | 110.85 | ||||||||
| Contracts securitized | 140.41 | 104.55 | 285.20 | 104.55 | ||||||||||||
| Total managed portfolio | $ | 806.14 | $ | 634.97 | $ | 806.14 | $ | 634.97 | ||||||||
| Average managed portfolio | 795.31 | 646.83 | 789.26 | 675.49 | ||||||||||||
| Allowance for finance credit losses as % of fin. receivables | 2.28 | % | 2.07 | % | ||||||||||||
| Aggregate allowance as % of fin. receivables (1) | 2.89 | % | 3.23 | % | ||||||||||||
| Delinquencies | ||||||||||||||||
| 31+ Days | 2.64 | % | 3.96 | % | ||||||||||||
| Repossession Inventory | 1.17 | % | 1.96 | % | ||||||||||||
| Total Delinquencies and Repo. Inventory | 3.81 | % | 5.92 | % | ||||||||||||
| Annualized net charge-offs as % of average owned portfolio | 3.16 | % | 6.04 | % | 3.53 | % | 7.74 | % | ||||||||
| Recovery rates (2) | 49.1 | % | 46.3 | % | 48.6 | % | 44.3 | % | ||||||||
| For the | For the | |||||||||||||||||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||
| Interest Income | $ | 41.5 | 20.9 | % | $ | 27.8 | 17.2 | % | $ | 82.2 | 20.8 | % | $ | 56.4 | 16.7 | % | ||||||||||||||||
| Servicing and Other Income | 2.6 | 1.3 | % | 3.3 | 2.1 | % | 6.5 | 1.7 | % | 7.2 | 2.1 | % | ||||||||||||||||||||
| Interest Expense | (19.8 | ) | -10.0 | % | (19.2 | ) | -11.9 | % | (42.1 | ) | -10.7 | % | (38.4 | ) | -11.4 | % | ||||||||||||||||
| Net interest margin | 24.3 | 12.2 | % | 11.9 | 7.4 | % | 46.5 | 11.8 | % | 25.2 | 7.5 | % | ||||||||||||||||||||
| Provision for credit losses | (7.7 | ) | -3.9 | % | (4.4 | ) | -2.7 | % | (12.5 | ) | -3.2 | % | (8.1 | ) | -2.4 | % | ||||||||||||||||
| Risk adjusted margin | 16.6 | 8.4 | % | 7.6 | 4.7 | % | 34.0 | 8.6 | % | 17.1 | 5.1 | % | ||||||||||||||||||||
| Core operating expenses | (15.3 | ) | -7.7 | % | (14.0 | ) | -8.7 | % | (32.1 | ) | -8.1 | % | (27.8 | ) | -8.2 | % | ||||||||||||||||
| Pre-tax income | 1.3 | 0.7 | % | (6.4 | ) | -4.0 | % | 1.9 | 0.5 | % | (10.6 | ) | -3.2 | % | ||||||||||||||||||
| (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) | As a percentage of the average managed portfolio. |
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