CPSS Consumer Portfolio Services Inc

Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $10.4 million, or $0.41 per diluted share, for its third quarter ended September 30, 2023. This compares to net income of $25.4 million, or $0.95 per diluted share, in the third quarter of 2022.

Revenues for the third quarter of 2023 were $92.1 million, an increase of $1.8 million, or 2.0%, compared to $90.3 million for the third quarter of 2022. Total operating expenses for the third quarter of 2023 were $77.9 million compared to $56.0 million for the 2022 period. Pretax income for the third quarter of 2023 was $14.2 million, compared to pretax income of $34.3 million in the third quarter of 2022.

For the nine months ended September 30, 2023 total revenues were $260.0 million compared to $246.7 million for the nine months ended September 30, 2022, an increase of approximately $13.3 million, or 5.4%. Total expenses for the nine months ended September 30, 2023 were $208.8 million, compared to $148.8 million for the nine months ended September 30, 2022. Pretax income for the nine months ended September 30, 2023 was $51.3 million, compared to $97.9 million for the nine months ended September 30, 2022. Net income for the nine months ended September 30, 2023 was $38.2 million compared to $71.8 million for the nine months ended September 30, 2022.

During the third quarter of 2023, CPS purchased $322.4 million of new contracts compared to $318.4 million during the second quarter of 2023 and $468.2 million during the third quarter of 2022. The Company's receivables totaled $2.943 billion as of September 30, 2023, an increase from $2.910 billion as of June 30, 2023 and $2.687 billion as of September 30, 2022.

Annualized net charge-offs for the third quarter of 2023 were 6.86% of the average portfolio as compared to 4.93% for the third quarter of 2022. Delinquencies greater than 30 days (including repossession inventory) were 13.31% of the total portfolio as of September 30, 2023, as compared to 10.85% as of September 30, 2022.

“Continued growth in both interest income and the loan portfolio were the book ends to our solid quarter,” said Charles E. Bradley, Chief Executive Officer. “Despite the economic headwinds, we remain cautiously optimistic as we continue to grow the loan portfolio and monitor the performance of existing loans while staying focused on cost efficiency.”

Conference Call

CPS announced that it will hold a conference call on Monday, November 13, 2023 at 12:30 p.m. ET to discuss its third quarter 2023 operating results.

Those wishing to participate can pre-register for the conference call at the following link https://register.vevent.com/register/BIea58c5c3c9184894b2f07b935bbe5826. Registered participants will receive an email containing conference call details for dial-in options. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the schedule start time. A replay will be available beginning two hours after conclusion of the call for 12 months via the Company’s website at https://ir.consumerportfolio.com/investor-relations.

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 figures representing allowances for remaining expected lifetime credit losses, 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 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. Any or 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 losses to be incurred in the future may affect future performance.

Investor Relations Contact

Danny Bharwani, Chief Financial Officer

949-753-6811

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,
			2023						2022						2023						2022
Revenues:
Interest income		$	83,261					$	79,817					$	245,960					$	225,547
Mark to finance receivables measured at fair value			6,000						8,183						6,000						15,283
Other income			2,818						2,305						8,077						5,859
			92,079						90,305						260,037						246,689
Expenses:
Employee costs			21,812						20,671						64,991						63,414
General and administrative			13,045						9,408						36,224						25,920
Interest			37,889						23,483						106,354						58,654
Provision for credit losses			(2,000	)					(6,000	)					(20,700	)					(23,400	)
Other expenses			7,115						8,399						21,915						24,213
			77,861						55,961						208,784						148,801
Income before income taxes			14,218						34,344						51,253						97,888
Income tax expense			3,839						8,931						13,097						26,040
Net income		$	10,379					$	25,413					$	38,156					$	71,848
Earnings per share:
Basic		$	0.49					$	1.22					$	1.83					$	3.39
Diluted		$	0.41					$	0.95					$	1.51					$	2.61
Number of shares used in computing earnings
per share:
Basic			21,154						20,911						20,815						21,166
Diluted			25,218						26,654						25,331						27,512
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
		September 30,						December 31,
			2023						2022
Assets:
Cash and cash equivalents		$	8,306					$	13,490
Restricted cash and equivalents			133,787						149,299
Finance receivables measured at fair value			2,671,540						2,476,617
Finance receivables			38,493						92,304
Allowance for finance credit losses			(4,228	)					(21,753	)
Finance receivables, net			34,265						70,551
Deferred tax assets, net			5,763						10,177
Other assets			27,187						32,634
		$	2,880,848					$	2,752,768
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses		$	62,309					$	55,421
Warehouse lines of credit			240,384						285,328
Residual interest financing			49,812						49,623
Securitization trust debt			2,243,284						2,108,744
Subordinated renewable notes			19,163						25,263
			2,614,952						2,524,379
Shareholders' equity			265,896						228,389
		$	2,880,848					$	2,752,768
Operating and Performance Data ($ in millions)
		At and for the												At and for the
		Three months ended												Nine months ended
		September 30,												September 30,
			2023						2022						2023						2022
Contracts purchased		$	322.42					$	468.21					$	1,055.96					$	1,426.30
Contracts securitized			312.68						440.00						1,045.42						1,200.00
Total portfolio balance (4)		$	2,943.33					$	2,687.31					$	2,943.33					$	2,687.31
Average portfolio balance (4)			2,934.75						2,648.21						2,898.44						2,463.88
Delinquencies (4)
31+ Days			11.74	%					9.72	%
Repossession Inventory			1.57	%					1.13	%
Total Delinquencies and Repo. Inventory			13.31	%					10.85	%
Annualized Net Charge-offs as % of Average Portfolio (4)			6.86	%					4.93	%					6.12	%					4.04	%
Recovery rates (1)			37.8	%					51.1	%					41.1	%					55.9	%
		For the												For the
		Three months ended												Nine months ended
		September 30,												September 30,
			2023						2022					2023							2022
			$(2)		% (3)				$(2)		% (3)				$(2)		% (3)				$(2)		% (3)
Interest income		$	83.26		11.3	%		$	79.82		12.1	%		$	245.96		11.3	%		$	225.55		12.2	%
Mark to finance receivables measured at fair value			6.00		0.8	%			8.18		1.2	%			6.00		0.3	%			15.28		0.8	%
Other income			2.82		0.4	%			2.31		0.3	%			8.08		0.4	%			5.86		0.3	%
Interest expense			(37.89	)	-5.2	%			(23.48	)	-3.5	%			(106.35	)	-4.9	%			(58.65	)	-3.2	%
Net interest margin			54.19		7.4	%			66.82		10.1	%			153.68		7.1	%			188.04		10.2	%
Provision for credit losses			2.00		0.3	%			6.00		0.9	%			20.70		1.0	%			23.40		1.3	%
Risk adjusted margin			56.19		7.7	%			72.82		11.0	%			174.38		8.0	%			211.44		11.4	%
Core operating expenses			(41.97	)	-5.7	%			(38.48	)	-5.8	%			(123.13	)	-5.7	%			(113.55	)	-6.1	%
Pre-tax income		$	14.22		1.9	%		$	34.34		5.2	%		$	51.25		2.4	%		$	97.89		5.3	%
(1) Wholesale auction liquidation amounts (net of expenses) as a percentage of the account balance at the time of sale.
(2) Numbers may not add due to rounding.
(3) Annualized percentage of the average portfolio balance. Percentages may not add due to rounding.
(4) Excludes third party portfolios.