SOURCE: Consumer Portfolio Services, Inc.

Consumer Portfolio Services, Inc.

August 14, 2009 17:58 ET

Consumer Portfolio Services, Inc. Reports 2009 Second Quarter Operating Results

IRVINE, CA--(Marketwire - August 14, 2009) - Consumer Portfolio Services, Inc. (NASDAQ: CPSS) ("CPS" or the "Company") today announced operating results for its second quarter ended June 30, 2009.

Total revenues for the second quarter of 2009 were $58.3 million, a decrease of approximately $40.5 million, or 41.0%, compared to $98.8 million for the second quarter of 2008. Total operating expenses for the second quarter of 2009 were $64.3 million, a decrease of $31.8 million, or 33.1%, as compared to $96.1 million for the 2008 period. Pretax loss for the second quarter of 2009 was $(6.0) million compared to pretax income of $2.7 million in the second quarter of 2008. Net loss for the second quarter of 2009 was $(6.0) million, or $(0.32) per diluted share, compared to net income of $1.5 million, or $0.08 per diluted share, for the year-ago quarter.

For the six months ended June 30, 2009, total revenues decreased approximately $77.7 million, or 38.5%, to $124.4 million, compared to $202.1 million for the six months ended June 30, 2008. Total expenses for the six months ended June 30, 2009 were $130.8 million, a decrease of $64.8 million, or 33.1%, as compared to $195.6 million for the six months ended June 30, 2008.

The pretax loss for the six months ended June 30, 2009 was ($6.5) million, compared to pretax income of $6.5 million for the six months ended June 30, 2008. Net loss for the six months ended June 30, 2009 was ($6.5) million, or ($0.34) per diluted share, compared to net income of $3.6 million, or $0.18 per diluted share, for the six months ended June 30, 2008.

During the second quarter of 2009, CPS purchased $937,000 of contracts from dealers as compared to $1.1 million during the first quarter of 2009 and $79.8 million during the second quarter of 2008. The Company's managed receivables totaled $1,333.9 million as of June 30, 2009, a decrease of $645.6 million, or 32.6%, from $1,979.5 million as of June 30, 2008, as follows ($ in millions):

                                                        June 30,  June 30,
                                                          2009      2008
                                                        --------- ---------

Owned by Consolidated Subsidiaries*                     $ 1,173.1 $ 1,979.4
Owned by Non-Consolidated Subsidiaries                      160.8       0.0
As Third Party Servicer for SeaWest Financial                 0.0       0.1
                                                        --------- ---------
     Total                                              $ 1,333.9 $ 1,979.5

* Before $86.0 million and $152.7 million of allowance for credit losses,
deferred acquisition fees and repossessed vehicles for 2009 and 2008,
respectively.

Annualized net charge-offs during the first half of 2009 quarter were 11.12% of the average owned portfolio as compared to 6.75% during the same period in 2008. Delinquencies greater than 30 days (including repossession inventory) were 6.99% of the total owned portfolio as of June 30, 2009, as compared to 6.12% as of June 30, 2008. The increase in net charge-off and delinquency percentages vs. the year-ago period can be partly attributed to the aging of the portfolio and the significant decrease in the size of the managed portfolio as nominal new contract purchases have not replaced portfolio run-off.

"While our financial results for the second quarter continued to be affected by the recession and the decline in our total managed portfolio, we are cautiously optimistic that the worst of the contraction in the economy and its impact on our customers is behind us," said Charles E. Bradley, Jr., Chief Executive Officer. "Over the last few months we have seen improvement in our early-stage asset performance metrics vs. the same period last year. In addition, recoveries on liquidated vehicles at the wholesale auction market have continued to improve and should be relatively stable given increasing sales of used cars. Both of these developments should bode well for delinquencies and charge-offs in the near future."

"On the capital markets front, during the quarter we were able to extend the maturity of our residual financing facility for a year until June 2010, which provides us with additional financial flexibility. The securitization market continues to improve as well as the first subprime auto deal this year was completed in July and yields required by investors have decreased significantly since the first quarter."

Conference Call

CPS announced that it will hold a conference call next Monday, August 17, 2009, at 1:30 p.m. ET to discuss its quarterly operating results. Those wishing to participate by telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the scheduled time.

A replay will be available between August 17, 2009 and August 24, 2009, beginning one hour after conclusion of the call, by dialing 800-642-1687 or 706-645-9291 for international participants, with conference identification number 25347904. 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 and at www.streetevents.com.

About Consumer Portfolio Services, Inc.

Consumer Portfolio Services, Inc. is a specialty finance company engaged in purchasing and servicing new and used retail automobile contracts originated primarily by franchised automobile dealerships and to a lesser extent by select independent dealers of used automobiles in the United States. We serve as an alternative source of financing for dealers, facilitating sales to sub-prime customers, who have limited credit history, low income or past credit problems and who otherwise might not be able to obtain financing from traditional sources.

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 or the effects of recent changes in bankruptcy law, 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.

            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,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------- ---------  ----------
Revenues:
Interest income                 $  54,960  $   94,856 $ 116,139  $  194,218
Servicing fees                        942         280     1,971         708
Other income                        2,420       3,645     6,261       7,156
                                ---------  ---------- ---------  ----------
                                   58,322      98,781   124,371     202,082
                                ---------  ---------- ---------  ----------
Expenses:
Employee costs                      8,980      12,886    18,242      26,368
General and administrative          5,842       7,574    12,452      14,921
Interest                           28,971      40,955    61,103      79,989
Provision for credit losses        18,489      30,894    34,578      65,803
Other expenses                      1,993       3,763     4,458       8,518
                                ---------  ---------- ---------  ----------
                                   64,275      96,072   130,833     195,599
                                ---------  ---------- ---------  ----------
Income before income taxes         (5,953)      2,709    (6,462)      6,483
Income taxes                            -       1,220         -       2,880
                                ---------  ---------- ---------  ----------
     Net income                 $  (5,953) $    1,489 $  (6,462) $    3,603
                                =========  ========== =========  ==========

Earnings per share:
   Basic                        $   (0.32) $     0.08 $   (0.34) $     0.19
   Diluted                          (0.32)       0.08     (0.34)       0.18

Number of shares used in
 computing earnings per share:
   Basic                           18,744      18,830    18,874      19,063
   Diluted                         18,744      19,411    18,874      19,692





                  Condensed Consolidated Balance Sheets
                              (In thousands)
                                (Unaudited)


                                                  June 30,    December 31,
                                                    2009          2008
                                                ------------  ------------

Cash                                            $     21,506  $     22,084
Restricted cash                                      139,580       153,479
                                                ------------  ------------
Total Cash                                           161,086       175,563
Finance receivables                                1,130,705     1,417,343
Allowance for finance credit losses                  (43,597)      (78,036)
                                                ------------  ------------
Finance receivables, net                           1,087,108     1,339,307
Residual interest in securitizations                   4,019         3,582
Deferred tax assets, net                              52,727        52,727
Other assets                                          42,040        67,628
                                                ------------  ------------
                                                $  1,346,980  $  1,638,807
                                                ============  ============

Accounts payable and other liabilities          $     23,807  $     21,702
Warehouse line of credit                               5,119         9,919
Residual interest financing                           62,650        67,300
Securitization trust debt                          1,128,158     1,404,211
Senior secured debt, related party                    20,649        20,105
Subordinated debt                                     22,855        25,721
                                                ------------  ------------
                                                   1,263,238     1,548,958
                                                ------------  ------------

Shareholders' equity                                  83,742        89,849
                                                ------------  ------------
                                                $  1,346,980  $  1,638,807
                                                ============  ============





Operating and Performance Data
 ($ in thousands)                  At and for the        At and for the
                                 Three months ended     Six months ended
                                      June 30,               June 30,
                                --------------------  --------------------
                                   2009       2008       2009       2008
                                ---------  ---------  ---------  ---------

Contract purchases                    937     79,834      2,033    255,924

Total managed portfolio         1,333,919  1,979,492  1,333,919  1,979,492

Average managed portfolio       1,384,290  2,023,572  1,466,377  2,068,129

Net interest margin (1)            25,989     53,901     55,036    114,229

Risk adjusted margin (2)            7,500     23,007     20,458     48,426

Core operating expenses (3)        16,815     24,223     35,152     49,807
  Annualized % of average
   managed portfolio                 4.86%      4.79%      4.79%      4.82%

Allowance for finance credit
 losses as % of fin.
 receivables                         3.86%      4.63%

Aggregate allowance as % of
 fin. receivables (4)                5.82%      5.91%

Delinquencies
    31+ Days                         4.29%      4.13%

    Repossession Inventory           2.71%      1.99%

    Total Delinquencies and
     Repossession Inventory          6.99%      6.12%

Annualized net charge-offs as %
 of average owned portfolio         10.59%      6.85%     11.12%      6.75%


(1)  Interest income less interest expense.
(2)  Net interest margin less provision for credit losses.
(3)  Total expenses less interest and provision for credit losses.
(4)  Includes allowance for finance credit losses and allowance for
     repossession inventory.

Contact Information

  • Investor Relations Contact
    Robert E. Riedl
    949-753-6800