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TheStreet Open House

CPS Announces Third Quarter 2012 Earnings

"We are extremely pleased with our third quarter financial results," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer. "It was our first quarter of organic sequential revenue growth since 2007 and the onset of the financial crisis. This demonstrates that we are well positioned within the auto finance industry to continue growing our managed portfolio. And as we fund this growth with cost-efficient securitizations, our net interest margin is expanding significantly. These two components have been big drivers of our earnings growth over the last year."

Conference Call

CPS announced that it will hold a conference call on Tuesday, October 16, 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 October 16, 2012 and October 23, 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 43148332. 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 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.

Consumer Portfolio Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
         
    Three months ended  September 30,   Nine months ended  September 30, 
  2012 2011 2012 2011
Revenues:        
Interest income  $ 45,053  $ 30,236  $ 127,210  $ 86,632
Servicing fees  502  986  1,897  3,530
Other income  2,365  2,592  7,481  7,201
   47,920  33,814  136,588  97,363
Expenses:        
Employee costs 8,730 8,257  25,878  23,343
General and administrative  3,690  3,286  11,765  10,697
Interest  19,560  19,011  61,696  57,377
Provision for credit losses  9,465  3,982  22,012  12,034
Other expenses  3,747  3,324  10,657  8,607
   45,192  37,860  132,008  112,058
Income (loss) before income taxes  2,728  (4,046)  4,580  (14,695)
Income taxes  --  --  --  --
Net income (loss)   $ 2,728  $ (4,046)  $ 4,580  $ (14,695)
         
Earnings (loss) per share:        
Basic  $ 0.14  $ (0.20)  $ 0.24  $ (0.78)
Diluted  $ 0.11  $ (0.20)  $ 0.19  $ (0.78)
         
Number of shares used in computing earnings (loss) per share:    
Basic  19,495  19,821  19,406  18,794
Diluted  25,695  19,821  24,026  18,794
 
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
     
  September 30, 2012 December 31, 2011
     
Cash  $ 10,468  $ 10,094
Restricted cash 107,240 159,228
Total Cash 117,708 169,322
     
Finance receivables 687,096 516,630
Allowance for finance credit losses (16,946) (10,351)
Finance receivables, net 670,150 506,279
     
Finance receivables measured at fair value 77,484 160,253
Residual interest in securitizations 4,895 4,414
Deferred tax assets, net 15,000 15,000
Other assets 37,628 34,782
   $ 922,865  $ 890,050
     
Accounts payable and other liabilities  $ 22,146  $ 27,993
Warehouse lines of credit 20,398 25,393
Residual interest financing 13,773 21,884
Debt secured by receivables measured at fair value 76,630 166,828
Securitization trust debt 721,396 583,065
Senior secured debt, related party 54,452 58,344
Subordinated debt 21,525 20,750
  930,320 904,257
     
Shareholders' equity (7,455) (14,207)
   $ 922,865  $ 890,050
       
Operating and Performance Data ($ in millions)      
         
    At and for the  Three months ended September 30,   At and for the Nine months ended  September 30, 
  2012 2011 2012 2011
         
Contracts purchased  $ 143.11  $ 81.17  $ 400.91  $ 192.02
Contracts securitized  154.70  111.05  437.90  215.60
         
Total managed portfolio  $ 844.86  $ 827.80  $ 844.86  $ 827.80
Average managed portfolio  831.30  691.24  803.27  669.03
         
Allowance for finance credit losses as % of fin. receivables 2.47% 1.97%    
         
Aggregate allowance as % of fin. receivables (1) 3.13% 2.91%    
         
Delinquencies        
31+ Days 3.33% 5.08%    
Repossession Inventory 1.31% 1.46%    
Total Delinquencies and Repo. Inventory 4.64% 6.54%    
         
Annualized net charge-offs as % of average owned portfolio 3.35% 4.13% 3.47% 6.56%
         
Recovery rates (2) 47.2% 43.2% 48.2% 44.0%
     
  For the  Three months ended September 30,  For the Nine months ended September 30, 
  2012 2011 2012 2011
  $ % (3) $ % (3) $ % (3) $ % (3)
Interest income  $ 45.1 21.7%  $ 30.2 17.5%  $ 127.2 21.1%  $ 86.6 17.3%
Servicing and other income  2.9 1.4%  3.6 2.1%  9.4 1.6%  10.7 2.1%
Interest expense  (19.6) -9.4%  (19.0) -11.0%  (61.7) -10.2%  (57.4) -11.4%
Net interest margin   28.4 13.6%  14.8 8.6%  74.9 12.4%  40.0 8.0%
Provision for credit losses  (9.5) -4.6%  (4.0) -2.3%  (22.0) -3.7%  (12.0) -2.4%
Risk adjusted margin  18.9 9.1%  10.8 6.3%  52.9 8.8%  28.0 5.6%
Core operating expenses  (16.2) -7.8%  (14.9) -8.6%  (48.3) -8.0%  (42.6) -8.5%
Pre-tax income  2.7 1.3%  (4.0) -2.3%  4.6 0.8%  (14.7) -2.9%
                 
(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.              
CONTACT: Investor Relations Contact
         
         Robert E. Riedl, Chief Investment Officer
         949 753-6800

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