Form 8-K - Current report

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) November 9, 2023

	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.)

	3800 Howard Hughes Pkwy, Suite 1400, Las Vegas, NV 89169
	(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):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	CPSS	The Nasdaq Stock Market LLC (Global Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On November 9, 2023, the registrant announced its earnings for the three-month period ended September 30, 2023. A copy of the announcement is attached as an exhibit to this report. As noted in the announcement, the registrant 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.

Item 9.01. Financial Statements and Exhibits.

Neither financial statements nor pro forma financial information are filed with this report.

(d) Exhibits

One exhibit is included with this report:

99.1	News release re earnings.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

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: November 13, 2023	By: /s/ Denesh Bharwani
	Denesh Bharwani Executive Vice President and Chief Financial Officer Signing on behalf of the registrant

Exhibit 99.1

NEWS RELEASE

CPS ANNOUNCES THIRD QUARTER 2023 EARNINGS

§ Revenue of $92.1 million, compared to $90.3 million in the prior year period

§ Pretax income of $14.2 million

§ Net income of $10.4 million, or $0.41 per diluted share

§ New contract purchases of $322.4 million

LAS VEGAS, NV, November 9, 2023 (GlobeNewswire) -- 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.

Cover	Nov. 09, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 09, 2023
Entity File Number	1-11416
Entity Registrant Name	CONSUMER PORTFOLIO SERVICES, INC.
Entity Central Index Key	0000889609
Entity Tax Identification Number	33-0459135
Entity Incorporation, State or Country Code	CA
Entity Address, Address Line One	3800 Howard Hughes Pkwy
Entity Address, Address Line Two	Suite 1400
Entity Address, City or Town	Las Vegas
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89169
City Area Code	949
Local Phone Number	753-6800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	CPSS
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Information, Former Legal or Registered Name	Not Applicable