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) May 10, 2024

	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 May 10, 2024, the registrant announced its earnings for the three-month period ended March 31, 2024. 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 Tuesday, May 14, 2024 at 01:00 p.m. ET to discuss its first quarter 2024 operating results. Those wishing to participate can pre-register for the conference call at the following link https://register.vevent.com/register/BIb847966685a54a42ad3f147d8676d40d. 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: May 13, 2024	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 FIRST QUARTER 2024 EARNINGS

Revenues of $91.7 million compared to $83.1 million in the prior year period

Pretax income of $6.6 million

Net income of $4.6 million, or $0.19 per diluted share

New contract purchases of $346.3 million

LAS VEGAS, NV, May 10, 2024 (GlobeNewswire) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $4.6 million, or $0.19 per diluted share, for its first quarter ended March 31, 2024. This compares to a net income of $13.8 million, or $0.54 per diluted share, in the first quarter of 2023.

Revenues for the first quarter of 2024 were $91.7 million, an increase of $8.6 million, or 10.4%, compared to $83.1 million for the first quarter of 2023. Total operating expenses for the first quarter of 2024 were $85.2 million compared to $64.7 million for the 2023 period. Pretax income for the first quarter of 2024 was $6.6 million compared to pretax income of $18.4 million in the first quarter of 2023.

During the first quarter of 2024, CPS purchased $346.3 million of new contracts compared to $301.8 million during the fourth quarter of 2023 and $415.2 million during the first quarter of 2023. The Company's receivables totaled $3.021 billion as of March 31, 2024, an increase from $2.970 billion as of December 31, 2023 and an increase from $2.882 billion as of March 31, 2023.

Annualized net charge-offs for the first quarter of 2024 were 7.84% of the average portfolio as compared to 5.20% for the first quarter of 2023. Delinquencies greater than 30 days (including repossession inventory) were 12.39% of the total portfolio as of March 31, 2024, as compared to 9.92% as of March 31, 2023.

"Our increasing origination volumes are showing themselves in the form of revenue increases year over year,” said Charles E. Bradley Jr., Chief Executive Officer. “Despite the persistent inflationary pressures on our margins, we stand poised to continue our growth, with a focus on efficiently servicing our portfolio as it grows to new highs.”

Conference Call

CPS announced that it will hold a conference call on May 14, 2024 at 1:00 p.m. ET to discuss its first quarter 2024 operating results.

Those wishing to participate can pre-register for the conference call at the following link https://register.vevent.com/register/BIb847966685a54a42ad3f147d8676d40d. 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 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
	March 31,
	2024			2023
Revenues:
Interest income	$	84,288		$	80,062
Mark to finance receivables measured at fair value		5,000			–
Other income		2,456			3,038
		91,744			83,100
Expenses:
Employee costs		24,416			22,033
General and administrative		13,753			11,396
Interest		41,968			32,759
Provision for credit losses		(1,635	)		(9,000	)
Other expenses		6,685			7,481
		85,187			64,669
Income before income taxes		6,557			18,431
Income tax expense		1,967			4,608
Net income	$	4,590		$	13,823

Earnings per share:
Basic	$	0.22		$	0.68
Diluted	$	0.19		$	0.54

Number of shares used in computing earnings per share:
Basic		21,143			20,418
Diluted		24,602			25,392

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	March 31,			December 31,
	2024			2023
Assets:
Cash and cash equivalents	$	13,249		$	6,174
Restricted cash and equivalents		137,706			119,257
Finance receivables measured at fair value		2,791,373			2,722,662

Finance receivables		18,781			27,553
Allowance for finance credit losses		(1,890	)		(2,869	)
Finance receivables, net		16,891			24,684


Deferred tax assets, net		3,485			3,736
Other assets		43,822			27,233
	$	3,006,526		$	2,903,746

Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses	$	79,122		$	62,544
Warehouse lines of credit		249,522			234,025
Residual interest financing		98,968			49,875
Securitization trust debt		2,277,676			2,265,446
Subordinated renewable notes		22,140			17,188
		2,727,428			2,629,078

Shareholders' equity		279,098			274,668
	$	3,006,526		$	2,903,746

Operating and Performance Data ($ in millions)

	At and for the
	Three months ended
	March 31,
	2024		2023

Contracts purchased	$	346.3	$	415.2
Contracts securitized	$	300.6	$	362.9

Total portfolio balance (1)	$	3,021.2	$	2,881.8
Average portfolio balance (1)	$	2,993.8	$	2,856.6


Delinquencies (1)
31+ Days		9.98%		8.26%
Repossession Inventory		2.41%		1.66%
Total Delinquencies and Repo. Inventory		12.39%		9.92%

Annualized Net Charge-offs as % of Average Portfolio (1)		7.84%		5.20%

Recovery rates (1), (2)		33.3%		41.8%

	For the
	Three months ended
	March 31,
	2024					2023
	$ (3)			% (4)		$ (3)			% (4)
Interest income	$	84.29			11.3%	$	80.06			11.2%
Mark to finance receivables measured at fair value		5.00			0.7%		–			0.0%
Other income		2.46			0.3%		3.04			0.4%
Interest expense		(41.97	)		-5.6%		(32.76	)		-4.6%
Net interest margin		49.78			6.7%		50.34			7.0%
Provision for credit losses		1.64			0.2%		9.00			1.3%
Risk adjusted margin		51.41			6.9%		59.34			8.3%
Other operating expenses (5)		(44.85	)		-6.0%		(40.91	)		-5.7%
Pre-tax income	$	6.56			0.9%	$	18.43			2.6%

(1) Excludes third party portfolios.

(2) Wholesale auction liquidation amounts (net of expenses) as a percentage of the account balance at the time of sale.

(3) Numbers may not add due to rounding.

(4) Annualized percentage of the average portfolio balance. Percentages may not add due to rounding.

(5) Total pre-tax expenses less provision for credit losses and interest expense.

Cover	May 10, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 10, 2024
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