Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Oct. 22, 2013 | Jun. 28, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'CONSUMER PORTFOLIO SERVICES INC | ' | ' |
Entity Central Index Key | '0000889609 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $127,513,776 |
Entity Common Stock, Shares Outstanding | ' | 24,437,296 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $22,112 | $12,966 |
Restricted cash and equivalents | 132,284 | 104,445 |
Finance receivables | 1,155,063 | 764,343 |
Less: Allowance for finance credit losses | -39,626 | -19,594 |
Finance receivables, net | 1,115,437 | 744,749 |
Finance receivables measured at fair value | 14,476 | 59,668 |
Residual interest in securitizations | 854 | 4,824 |
Furniture and equipment, net | 766 | 726 |
Deferred financing costs | 11,071 | 9,140 |
Deferred tax assets, net | 59,215 | 75,640 |
Accrued interest receivable | 18,670 | 10,411 |
Other assets | 21,481 | 15,051 |
Total | 1,396,366 | 1,037,620 |
Liabilities | ' | ' |
Accounts payable and accrued expenses | 24,839 | 17,785 |
Warehouse lines of credit | 9,452 | 21,731 |
Residual interest financing | 19,096 | 13,773 |
Debt secured by receivables measured at fair value | 13,117 | 57,107 |
Securitization trust debt | 1,177,559 | 792,497 |
Senior secured debt, related party | 38,559 | 50,135 |
Subordinated renewable notes | 19,142 | 23,281 |
Total | 1,301,764 | 976,309 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
Shareholders' Equity | ' | ' |
Common stock, no par value; authorized 75,000,000 shares; 24,015,585 and 19,838,913 shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively | 73,422 | 65,678 |
Retained earnings | 22,275 | 1,270 |
Accumulated other comprehensive loss | -1,095 | -5,637 |
Total | 94,602 | 61,311 |
Total | 1,396,366 | 1,037,620 |
Series A Preferred Stock [Member] | ' | ' |
Shareholders' Equity | ' | ' |
Preferred stock, $1 par value; authorized 4,998,130 shares; none issued Series A preferred stock, $1 par value; authorized 5,000,000 shares; none issued Series B preferred stock, $1 par value; authorized 1,870 shares; none issued | 0 | 0 |
Series B Preferred Stock [Member] | ' | ' |
Shareholders' Equity | ' | ' |
Preferred stock, $1 par value; authorized 4,998,130 shares; none issued Series A preferred stock, $1 par value; authorized 5,000,000 shares; none issued Series B preferred stock, $1 par value; authorized 1,870 shares; none issued | $0 | $0 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Shareholders' Equity | ' | ' |
Preferred Stock, Par Value | $1 | $1 |
Preferred Stock, Authorized | 4,998,130 | 4,998,130 |
Preferred Stock, Issued | 0 | 0 |
Preferred Stock, Outstanding | 0 | 0 |
Common Stock, Par Value | $0 | $0 |
Common Stock, Authorized | 75,000,000 | 75,000,000 |
Common Stock, Issued | 24,015,585 | 19,838,913 |
Common Stock, Outstanding | 24,015,585 | 19,838,913 |
Series A Preferred Stock [Member] | ' | ' |
Shareholders' Equity | ' | ' |
Preferred Stock, Par Value | $1 | $1 |
Preferred Stock, Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Issued | 0 | 0 |
Preferred Stock, Outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ' | ' |
Shareholders' Equity | ' | ' |
Preferred Stock, Par Value | $1 | $1 |
Preferred Stock, Authorized | 1,870 | 1,870 |
Preferred Stock, Issued | 0 | 0 |
Preferred Stock, Outstanding | 0 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | ' | ' |
Interest income | $231,330 | $175,314 |
Servicing fees | 3,093 | 2,305 |
Other income | 10,405 | 9,589 |
Gain on cancellation of debt | 10,947 | 0 |
Total | 255,775 | 187,208 |
Expenses: | ' | ' |
Employee costs | 42,960 | 35,573 |
General and administrative | 16,345 | 15,429 |
Interest | 58,179 | 79,422 |
Provision for credit losses | 76,869 | 33,495 |
Provision for contingent liabilities | 7,841 | 0 |
Marketing | 13,363 | 10,665 |
Occupancy | 2,608 | 2,894 |
Depreciation and amortization | 437 | 543 |
Total expenses | 218,602 | 178,021 |
Income before income tax expense | 37,173 | 9,187 |
Income tax expense (benefit) | 16,168 | -60,221 |
Net income | $21,005 | $69,408 |
Earnings per share: | ' | ' |
Basic | $0.98 | $3.56 |
Diluted | $0.67 | $2.72 |
Number of shares used in computing earnings per share: | ' | ' |
Basic | 21,538 | 19,473 |
Diluted | 31,574 | 25,478 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Consolidated Statements Of Comprehensive Income | ' | ' |
Net income | $21,005 | $69,408 |
Other comprehensive income; change in funded status of pension plan, net of $3,044 and ($150) in tax for 2013 and 2012, respectively | 4,542 | 2,898 |
Comprehensive income | $25,547 | $72,306 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | Common Stock | Retained Earnings / Accumulated Deficit | Accumulated Other Comprehensive Income / Loss | Total |
In Thousands, except Share data | ||||
Beginning Balance, Amount at Dec. 31, 2011 | $62,466 | ($68,138) | ($8,535) | ($14,207) |
Beginning Balance, Shares at Dec. 31, 2011 | 19,527 | ' | ' | ' |
Common stock issued upon exercise of options and warrants, Amount | 1,206 | ' | ' | 1,206 |
Common stock issued upon exercise of options and warrants, Shares | 632 | ' | ' | ' |
Purchase of common stock, Amount | -435 | ' | ' | -435 |
Purchase of common stock, Shares | -320 | ' | ' | ' |
Pension benefit obligation | ' | ' | 2,898 | 2,898 |
Reclassification of warrants from debt | 1,307 | ' | ' | 1,307 |
Stock-based compensation | 1,134 | ' | ' | 1,134 |
Net income | ' | 69,408 | ' | 69,408 |
Ending Balance, Amount at Dec. 31, 2012 | 65,678 | 1,270 | -5,637 | 61,311 |
Ending Balance, Shares at Dec. 31, 2012 | 19,839 | ' | ' | ' |
Common stock issued upon exercise of options and warrants, Amount | 3,297 | ' | ' | 3,297 |
Common stock issued upon exercise of options and warrants, Shares | 4,177 | ' | ' | ' |
Pension benefit obligation | ' | ' | 4,542 | 4,542 |
Reclassification of warrants from debt | 583 | ' | ' | 583 |
Stock-based compensation | 3,864 | ' | ' | 3,864 |
Net income | ' | 21,005 | ' | 21,005 |
Ending Balance, Amount at Dec. 31, 2013 | $73,422 | $22,275 | ($1,095) | $94,602 |
Ending Balance, Shares at Dec. 31, 2013 | 24,016 | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | ' | ' |
Net income | $21,005 | $69,408 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Accretion of deferred acquisition fees | -20,565 | -15,957 |
Accretion of purchase discount on receivables measured at fair value | -1,421 | -4,144 |
Amortization of discount on securitization trust debt | 600 | 1,913 |
Amortization of discount on senior secured debt, related party | 1,992 | 2,296 |
Accretion of premium on debt secured by receivables measured at fair value | 2,726 | 4,579 |
Mark to fair value on debt secured by receivables at fair value | -747 | 7,113 |
Mark to fair value of receivables measured at fair value | 595 | -6,634 |
Depreciation and amortization | 437 | 543 |
Amortization of deferred financing costs | 6,803 | 5,954 |
Provision for credit losses | 76,869 | 33,495 |
Provision for contingent liabilities | 7,841 | 0 |
Stock-based compensation expense | 3,864 | 1,134 |
Interest income on residual assets | 0 | -410 |
Gain on cancellation of debt | -10,947 | 0 |
Change in fair value of warrants | 0 | 695 |
Changes in assets and liabilities: | ' | ' |
Accrued interest receivable | -8,259 | -3,979 |
Other assets | -2,183 | 5,625 |
Deferred tax assets | 16,425 | -60,640 |
Accounts payable and accrued expenses | 4,337 | -6,002 |
Net cash provided by operating activities | 99,372 | 34,989 |
Cash flows from investing activities: | ' | ' |
Purchases of finance receivables held for investment | -764,087 | -551,742 |
Payments received on finance receivables held for investment | 337,095 | 295,734 |
Payments on receivables portfolio at fair value | 46,018 | 111,363 |
Proceeds received on residual interest in securitizations | 3,970 | 0 |
Change in repossessions in inventory | -4,246 | -1,237 |
Decreases (increases) in restricted cash and equivalents, net | -27,839 | 54,783 |
Purchase of furniture and equipment | -477 | -394 |
Net cash used in investing activities | -409,566 | -91,493 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of securitization trust debt | 778,000 | 558,500 |
Proceeds from issuance of subordinated renewable notes | 1,276 | 4,957 |
Proceeds from issuance of senior secured debt, related party | 5,284 | 0 |
Payments on subordinated renewable notes | -5,415 | -2,426 |
Net repayments of warehouse lines of credit | -12,279 | -3,662 |
Net proceeds from (repayments of) residual interest financing debt | 5,323 | -8,111 |
Repayment of securitization trust debt | -382,591 | -350,981 |
Repayment of debt secured by receivables measured at fair value | -45,969 | -121,413 |
Repayment of senior secured debt, related party | -18,852 | -11,200 |
Payment of financing costs | -8,734 | -7,059 |
Purchase of common stock | 0 | -435 |
Exercise of options and warrants | 3,297 | 1,206 |
Net cash provided by financing activities | 319,340 | 59,376 |
Increase in cash and cash equivalents | 9,146 | 2,872 |
Cash and cash equivalents at beginning of period | 12,966 | 10,094 |
Cash and cash equivalents at end of period | 22,112 | 12,966 |
Cash paid during the period for: | ' | ' |
Interest | 50,663 | 75,654 |
Income taxes | 2,277 | 1,139 |
Non-cash financing activities: | ' | ' |
Pension benefit obligation, net | -4,542 | -2,898 |
Derivative warrants reclassified from accounts payable to common stock | $583 | $1,307 |
1_Summary_of_Significant_Accou
1. Summary of Significant Accounting Policies | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Summary of Significant Accounting Policies | ' | ||||||||
Description of Business | |||||||||
Consumer Portfolio Services, Inc. ("CPS") was incorporated in California on March 8, 1991. CPS and its subsidiaries (collectively, the "Company") specialize in purchasing and servicing retail automobile installment sale contracts ("contracts") originated by licensed motor vehicle dealers ("Dealers") located throughout the United States. Dealers located in California, Texas, Pennsylvania, Illinois, Georgia and New Jersey represented 10.6%, 10.0%, 6.0%, 5.2%, 5.1% and 5.1%, respectively, of contracts purchased during 2013 compared with 13.5%, 9.5%, 9.2%, 4.3%, 5.0% and 4.1%, respectively in 2012. No other state had a concentration in excess of 5.0% in 2013. We specialize in contracts with borrowers who generally would not be expected to qualify for traditional financing provided by commercial banks or automobile manufacturers’ captive finance companies. | |||||||||
We are subject to various regulations and laws as they relate to the extension of credit in consumer credit transactions. Failure to comply with such laws and regulations could have a material adverse effect on the Company. | |||||||||
Principles of Consolidation | |||||||||
The Consolidated Financial Statements include the accounts of Consumer Portfolio Services, Inc. and its wholly-owned subsidiaries, certain of which are special purpose subsidiaries ("SPS"), formed to accommodate the structures under which we purchase and securitize our contracts. The Consolidated Financial Statements also include the accounts of CPS Leasing, Inc., an 80% owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Cash and Cash Equivalents | |||||||||
For purposes of the statements of cash flows, we consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of cash on hand and due from banks and money market accounts. Substantially all of our cash is deposited at three financial institutions. We maintain cash due from banks in excess of the banks' insured deposit limits. We do not believe we are exposed to any significant credit risk on these deposits. As part of certain financial covenants related to debt facilities, we are required to maintain a minimum unrestricted cash balance. As of December 31, 2013, our unrestricted cash balance was $22.1 million, which exceeded the minimum amounts required by our financial covenants. | |||||||||
Finance Receivables | |||||||||
Finance receivables, which we have the intent and ability to hold for the foreseeable future or until maturity or payoff, are presented at cost. All finance receivable contracts are held for investment. Interest income is accrued on the unpaid principal balance. Origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Generally, payments received on finance receivables are restricted to certain securitized pools, and the related contracts cannot be resold. Finance receivables are charged off pursuant to the controlling documents of certain securitized pools, generally as described below under Charge Off Policy. Management may authorize an extension of payment terms if collection appears likely during the next calendar month. | |||||||||
Our portfolio of finance receivables consists of small-balance homogeneous contracts that are collectively evaluated for impairment on a portfolio basis. We report delinquency on a contractual basis. Once a Contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the Contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a Contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. | |||||||||
Allowance for Finance Credit Losses | |||||||||
In order to estimate an appropriate allowance for losses likely incurred on finance receivables, we use a loss allowance methodology commonly referred to as "static pooling," which stratifies the finance receivable portfolio into separately identified pools based on their period of origination, then uses historical performance of seasoned pools to estimate future losses on current pools. Historical loss experience is adjusted as necessary for current economic conditions. We consider our portfolio of finance receivables to be relatively homogenous and consequently we analyze credit performance primarily in the aggregate rather than stratification by any particular credit quality indicator. Using analytical and formula driven techniques, we estimate an allowance for finance credit losses, which we believe is adequate for probable incurred credit losses that can be reasonably estimated in our portfolio of finance receivable contracts. For each monthly pool of contracts that we purchase, we begin establishing the allowance in the month of acquisition and increase it over the subsequent 11 months, through a provision for credit losses charged to our consolidated statement of operations. Net losses incurred on finance receivables are charged to the allowance. We evaluate the adequacy of the allowance by examining current delinquencies, the characteristics of the portfolio, the value of the underlying collateral and historical loss trends. As conditions change, our level of provisioning and/or allowance may change. | |||||||||
Finance Receivables and Related Debt Measured at Fair Value | |||||||||
In September 2011, we acquired $217.8 million of finance receivables from Fireside Bank for a purchase price of $201.3 million. The receivables were acquired by our wholly-owned special purpose subsidiary, CPS Fender Receivables, LLC, which issued a note for $197.3 million, with a fair value of $196.5 million. | |||||||||
The receivables we acquired are pledged as collateral for debt that was structured specifically for the acquisition of this portfolio. Since the Fireside receivables were originated by another entity with its own underwriting guidelines and procedures, we elected to account for the Fireside receivables and the related debt secured by those receivables at their estimated fair values so that changes in fair value will be reflected in our results of operations as they occur. We use our own assumptions about the factors that we believe market participants would use in pricing similar receivables and debt, and are based on the best information available in the circumstances. The valuation method used to estimate fair value may produce a fair value measurement that may not be indicative of ultimate realizable value. Furthermore, while we believe our valuation methods are appropriate and consistent with those used by other market participants, the use of different methods or assumptions to estimate the fair value of certain financial instruments could result in different estimates of fair value. Those estimated values may differ significantly from the values that would have been used had a readily available market for such receivables or debt existed, or had such receivables or debt been liquidated, and those differences could be material to the financial statements. Interest income from the receivables and interest expense on the debt are included in interest income and interest expense, respectively. Changes to the fair value of the receivables and debt are also to be included in interest income and interest expense, respectively. | |||||||||
Charge Off Policy | |||||||||
Delinquent contracts for which the related financed vehicle has been repossessed are generally charged off at the earliest of (1) the month in which the proceeds from the sale of the financed vehicle are received, (2) the month in which 90 days have passed from the date of repossession or (3) the month in which the Contract becomes seven scheduled payments past due (see Repossessed and Other Assets below). The amount charged off is the remaining principal balance of the Contract, after the application of the net proceeds from the liquidation of the financed vehicle. With respect to delinquent contracts for which the related financed vehicle has not been repossessed, the remaining principal balance is generally charged off no later than the end of the month that the Contract becomes five scheduled payments past due. | |||||||||
Contract Acquisition Fees and Origination Costs | |||||||||
Upon purchase of a Contract from a Dealer, we generally either charge or advance the Dealer an acquisition fee. Dealer acquisition fees and deferred origination costs are applied to the carrying value of finance receivables and are accreted into earnings as an adjustment to the yield over the estimated life of the Contract using the interest method. | |||||||||
Repossessed and Other Assets | |||||||||
If a Contract obligor fails to make or keep promises for payments, or if the obligor is uncooperative or attempts to evade contact or hide the vehicle, a supervisor will review the collection activity relating to the account to determine if repossession of the vehicle is warranted. Generally, such a decision is made between the 60th and 90th day past the obligor’s payment due date, but could occur sooner or later, depending on the specific circumstances. At the time the vehicle is repossessed we stop accruing interest on the Contract, and reclassify the remaining Contract balance to the line item "Other assets" on our Consolidated Balance Sheet at its estimated fair value less costs to sell. Included in other assets in the accompanying balance sheets are repossessed vehicles pending sale of $10.0 million and $5.7 million at December 31, 2013 and 2012, respectively. | |||||||||
Treatment of Securitizations | |||||||||
Our term securitization structure has generally been as follows: | |||||||||
We sell contracts we acquire to a wholly-owned special purpose subsidiary ("SPS"), which has been established for the limited purpose of buying and reselling our contracts. The SPS then transfers the same contracts to another entity, typically a statutory trust ("Trust"). The Trust issues interest-bearing asset-backed securities ("Notes"), in a principal amount equal to or less than the aggregate principal balance of the contracts. We typically sell these contracts to the Trust at face value and without recourse, except representations and warranties that we make to the Trust that are similar to those provided to us by the Dealer. One or more investors purchase the Notes issued by the Trust (the "Noteholders"); the proceeds from the sale of the Notes are then used to purchase the contracts from us. We may retain or sell subordinated Notes issued by the Trust. In addition, we have provided "Credit Enhancement" for the benefit of the Noteholders in three forms: (1) an initial cash deposit to a bank account (a "Spread Account") held by the Trust, (2) overcollateralization of the Notes, where the principal balance of the Notes issued is less than the principal balance of the contracts, and (3) in the form of subordinated Notes. The agreements governing the securitization transactions (collectively referred to as the "Securitization Agreements") require that the initial level of Credit Enhancement be supplemented by a portion of collections from the contracts until the level of Credit Enhancement reaches specified levels, which are then maintained. The specified levels are generally computed as a percentage of the principal amount remaining unpaid under the related contracts. The specified levels at which the Credit Enhancement is to be maintained will vary depending on the performance of the portfolios of contracts held by the Trusts and on other conditions. Such levels have increased and decreased from time to time based on performance of the various portfolios, and have also varied by from one Trust to another. | |||||||||
Our warehouse securitization structures are similar to the above, except that (i) the SPS that purchases the contracts pledges the contracts to secure promissory notes or loans that it issues, and (ii) no increase in the required amount of Credit Enhancement is contemplated. Upon each sale of contracts in a securitization structured as a secured financing, we retain as assets on our Consolidated Balance Sheet the securitized contracts and record as indebtedness the Notes issued in the transaction. | |||||||||
For all of the securitizations that we have completed since July 2003 (other than the September 2008 and September 2010 securitizations), we have the power to direct the most significant activities of the SPS. In addition, we have the obligation to absorb losses and the rights to receive benefits from the SPS, both of which could be potentially significant to the SPS. These types of securitization structures are treated as secured financings, in which the receivables remain on our consolidated balance sheet, and the debt issued by the SPS is shown as a securitization trust debt on our consolidated balance sheet | |||||||||
Under the September 2008 and September 2010 securitizations and other term securitizations completed prior to July 2003 (which were structured as sales for financial accounting purposes), we removed from our Consolidated Balance Sheet the contracts sold and added to our Consolidated Balance Sheet (i) the cash received, if any, and (ii) the estimated fair value of the ownership interest that we retained in contracts sold in the securitization. That retained or residual interest (the "Residual") consists of (a) the cash held in the Spread Account, if any, (b) overcollateralization, if any, (c) Notes retained, if any, and (d) receivables from the Trust, which include the net interest receivables ("NIRs"). NIRs represent the estimated discounted cash flows to be received from the Trust in the future, net of principal and interest payable with respect to the Notes, any premiums paid to the senior Note insurer (a “Note Insurer”), if any, and certain other expenses. | |||||||||
We recognize gains or losses attributable to any changes in the estimated fair value of the Residuals. Gains in fair value are recognized as Other Income and losses are recorded as an impairment loss in the Consolidated Statement of Operations. We are not aware of an active market for the purchase or sale of interests such as the Residuals; accordingly, we determine the estimated fair value of the Residuals by discounting the amount of anticipated cash flows that we estimate will be released to us in the future (the cash out method), using a discount rate that we believe is appropriate for the risks involved. The anticipated cash flows may include collections from both current and charged off receivables. We have used an effective pre-tax discount rate of 20% per annum. | |||||||||
We receive periodic base servicing fees for the servicing and collection of the contracts. In addition, we are entitled to the cash flows from the Trusts that represent collections on the contracts in excess of the amounts required to pay principal and interest on the Notes, the base servicing fees, and the premium paid to the Note Insurer, if any, and certain other fees (such as trustee and custodial fees). Required principal payments on the Notes are generally defined as the payments sufficient to keep the principal balance of the Notes equal to the aggregate principal balance of the related contracts (excluding those contracts that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related Securitization Agreements require accelerated payment of principal until the principal balance of the Notes is reduced to the specified percentage. Such accelerated principal payment is said to create "overcollateralization" of the Notes. | |||||||||
If the amount of cash required for payment of fees, interest and principal on the senior Notes exceeds the amount collected during the collection period, the shortfall is generally withdrawn from the Spread Account, if any. If the cash collected during the period exceeds the amount necessary for the above allocations plus required principal payments on the subordinated Notes, if any, and there is no shortfall in the related Spread Account or other form of Credit Enhancement, the excess is released to us. If the total Credit Enhancement amount is not at the required level, then the excess cash collected is retained in the Trust until the specified level is achieved. Cash in the Spread Accounts is restricted from our use. Cash held in the various Spread Accounts is invested in high quality, liquid investment securities, as specified in the Securitization Agreements. In determining the value of the Residuals, we have estimated the future rates of prepayments, delinquencies, defaults, default loss severity, and recovery rates, as all of these factors affect the amount and timing of the estimated cash flows. Our estimates are based on historical performance of comparable contracts. | |||||||||
Following a securitization that is structured as a sale for financial accounting purposes, we recognize interest income on the balance of the Residuals. In addition, we will recognize additional revenue in other income if the actual performance of the contracts related to the Residuals is better than our estimate of the value of the Residual. If the actual performance of the contracts is worse than our estimate, then a reduction to the carrying value of the Residuals and a related impairment charge would be required. In a securitization structured as a secured financing for financial accounting purposes, interest income is recognized when accrued under the terms of the related contracts and, therefore, presents less potential for fluctuations in performance when compared to the approach used in a transaction structured as a sale for financial accounting purposes. | |||||||||
In all of our term securitizations, whether treated as secured financings or as sales, we have transferred the receivables (through a subsidiary) to the securitization Trust. The difference between the two structures is that in securitizations that are treated as secured financings we report the assets and liabilities of the securitization Trust on our Consolidated Balance Sheet. Under both structures the Noteholders’ and the related securitization Trusts’ recourse against us for failure of the contract obligors to make payments on a timely basis is limited, in general, to our Finance receivables, Spread Accounts and Residuals. | |||||||||
Servicing | |||||||||
We consider the contractual servicing fee received on our managed portfolio held by non-consolidated subsidiaries to be equal to adequate compensation. Additionally, we consider that these fees would fairly compensate a substitute servicer, should one be required. As a result, no servicing asset or liability has been recognized. Servicing fees received on the managed portfolio held by non-consolidated subsidiaries are reported as income when earned. Servicing fees received on the managed portfolio held by consolidated subsidiaries are included in interest income when earned. Servicing costs are charged to expense as incurred. Servicing fees receivable, which are included in Other Assets in the accompanying Consolidated Balance Sheets, represent fees earned but not yet remitted to us by the trustee. | |||||||||
Furniture and Equipment | |||||||||
Furniture and equipment are stated at cost net of accumulated depreciation. We calculate depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Assets held under capital leases and leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related lease terms. Amortization expense on assets acquired under capital lease is included with depreciation expense on owned assets. | |||||||||
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of | |||||||||
Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. | |||||||||
Other Income | |||||||||
The following table presents the primary components of Other Income: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Direct mail revenues | $ | 7,004 | $ | 5,949 | |||||
Convenience fees charged to obligors | 2,965 | 2,907 | |||||||
Recoveries on previously charged-off contracts | 177 | 392 | |||||||
Sales tax refunds | 197 | 227 | |||||||
Other | 62 | 114 | |||||||
$ | 10,405 | $ | 9,589 | ||||||
Earnings Per Share | |||||||||
The following table illustrates the computation of basic and diluted earnings per share: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands, | |||||||||
except per share data) | |||||||||
Numerator: | |||||||||
Numerator for basic and diluted earnings per share | $ | 21,005 | $ | 69,408 | |||||
Denominator: | |||||||||
Denominator for basic earnings per share - weighted average number of common shares outstanding during the year | $ | 21,538 | $ | 19,473 | |||||
Incremental common shares attributable to exercise of outstanding options and warrants | 10,036 | 6,005 | |||||||
Denominator for diluted earnings per share | $ | 31,574 | $ | 25,478 | |||||
Basic earnings per share | $ | 0.98 | $ | 3.56 | |||||
Diluted earnings per share | $ | 0.67 | $ | 2.72 | |||||
Incremental shares of 2.1 million and 979,000 related to stock options and warrants have been excluded from the diluted earnings per share calculation for the years ended December 31, 2013 and 2012, respectively, because the effect is anti-dilutive. | |||||||||
Deferral and Amortization of Debt Issuance Costs | |||||||||
Costs related to the issuance of debt are deferred and amortized using the interest method over the contractual or expected term of the related debt. | |||||||||
Income Taxes | |||||||||
The Company and its subsidiaries file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain states. We utilize the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the future tax consequences attributable to the differences between the financial statement values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We estimate a valuation allowance against that portion of the deferred tax asset whose utilization in future periods is not more than likely. | |||||||||
Purchases of Company Stock | |||||||||
We record purchases of our own common stock at cost and treat the shares as retired. | |||||||||
Stock Option Plan | |||||||||
We recognize compensation costs in the financial statements for all share-based payments granted subsequent to January 1, 2006 based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. Compensation cost is recognized over the required service period, generally defined as the vesting period. | |||||||||
Recently Issued Accounting Standards | |||||||||
In July 2013, the FASB issued ASU 2013-11, which requires a reporting entity to present an unrecognized tax benefit as a liability in the financial statements separate from deferred tax assets if a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available as of the reporting date to settle taxes that would result from the disallowance of the tax position or if a reporting entity does not intend to use the deferred tax asset for such purpose. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2013. We do not expect the adoption of ASU 2013-11 to have a material impact on our consolidated financial statements. | |||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Specifically, a number of estimates were made in connection with determining an appropriate allowance for finance credit losses, determining appropriate reserves for contingent liabilities, valuing finance receivables measured at fair value and the related debt, accreting net acquisition fees, amortizing deferred costs, and recording deferred tax assets and reserves for uncertain tax positions. These are material estimates that could be susceptible to changes in the near term and, accordingly, actual results could differ from those estimates. | |||||||||
Reclassification | |||||||||
Certain amounts for the prior year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’ equity. | |||||||||
Derivative Financial Instruments | |||||||||
We do not use derivative financial instruments to hedge exposures to cash flow or market risks. However, from 2008 to 2010, we issued warrants to purchase our common stock in conjunction with various debt financing transactions. At the time of issuance, five of these warrants issued contained "down round," or price reset, features that are subject to classification as liabilities for financial statement purposes. These liabilities were measured at fair value, with the changes in fair value at the end of each period reflected as current period income or loss. Accordingly, changes to the market price per share of our common stock underlying these warrants with "down round" features directly affected the fair value computations for these derivative financial instruments. The effect was that any increase in the market price per share of our common stock would also increase the related liability, which in turn would result in a current period loss. Conversely, any decrease in the market price per share of our common stock would also decrease the related liability, which in turn would result in a current period gain. We used a binomial pricing model to compute the fair value of the liabilities associated with the outstanding warrants. In computing the fair value of the warrant liabilities at the end of each period, we used significant judgments with respect to the risk free interest rate, the volatility of our stock price, and the estimated life of the warrants. The warrant liabilities were included in Accounts payable and accrued expenses on our consolidated balance sheets. On March 29, 2012 we agreed with the holders to amend three of the five warrants that contained the “down round” features, removing those specific price reset terms. On the date of the amendment, we valued each of the three warrants using a binomial pricing model as described above. The aggregate value of the three amended warrants of $1.1 million was then reclassified from Accounts payable to Common stock. On June 25, 2012 we agreed with the holder to amend one other warrant that contained the “down round” features, removing those specific price reset terms. The $250,000 aggregate value of this amended warrant was reclassified from Accounts payable to Common stock on the date of the amendment. The fifth warrant with the “down round” feature was exercised on February 22, 2013. The $583,000 intrinsic value of this warrant was reclassified from Accounts payable to Common stock on the date of the exercise. As of December 31, 2013 all five of the warrants issued that previously contained price reset features have either been amended or exercised and are no longer subject to quarterly valuations. | |||||||||
Financial Covenants | |||||||||
Certain of our securitization transactions, our residual interest financing and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2013 we were in compliance with all such financial covenants. | |||||||||
Gain on Cancellation of Debt | |||||||||
In April 2013, we repurchased the outstanding Class D notes from our first 2008 securitization for a cash payment of $6.1 million and a new 5% note for $5.3 million due in June 2014. The Class D notes were held by the same related party that holds our senior secured debt. On the date we repurchased the Class D notes, the Class D note holder owned 10.5% of our outstanding common stock and warrants to purchase an additional 1.9 million shares of common stock. We subsequently exercised our “clean-up call” option and repurchased the remaining collateral from the related securitization trust. The aggregate value of our consideration for the Class D notes was $10.9 million less than our carrying value of the Class D notes at the time of the repurchase. As a result of the repurchase of the Class D notes and the termination of the securitization trust, we realized a gain of $10.9 million. | |||||||||
Provision for Contingent Liabilities | |||||||||
During 2013, we recognized $7.8 million in contingent liability expenses to either record or adjust the amounts we believe we may incur related to various pending litigation. The amount was allocated in part to a long running case we refer to as the Stanwich litigation, and also to more recent matters including two California class action suits where we are the defendant, and a governmental inquiry, in which the United States Federal Trade Commission (“FTC”) has informally proposed that the we refrain from certain allegedly unfair trade practices, and make restitutionary payments into a consumer relief fund. (See Note 13) |
2_Restricted_Cash
2. Restricted Cash | 12 Months Ended |
Dec. 31, 2013 | |
Cash and Cash Equivalents [Abstract] | ' |
2. Restricted Cash | ' |
Restricted cash consists of cash and cash equivalent accounts relating to our outstanding securitization trusts and credit facilities. The amount of restricted cash on our consolidated balance sheets was $132.3 million and $104.4 million as of December 31, 2013 and 2012, respectively. | |
Our securitization transactions and one of our warehouse credit facilities require that we establish cash reserves, or spread accounts, as additional credit enhancement. These cash reserves, which are included in restricted cash, were $23.3 million and $25.6 million as of December 31, 2013 and 2012, respectively. |
3_Finance_Receivables
3. Finance Receivables | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Finance Receivables | ' | ||||||||
Finance Receivables | ' | ||||||||
Our portfolio of finance receivables consists of small-balance homogeneous contracts comprising a single segment and class that is collectively evaluated for impairment on a portfolio basis according to delinquency status. Our contract purchase guidelines are designed to produce a homogenous portfolio. We report delinquency on a contractual basis. Once a contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. | |||||||||
The following table presents the components of Finance receivables, net of unearned interest: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Finance receivables | (In thousands) | ||||||||
Automobile finance receivables, net of unearned interest | $ | 1,182,950 | $ | 795,786 | |||||
Less: Unearned acquisition fees and discounts | (27,887 | ) | (31,443 | ) | |||||
Finance receivables | $ | 1,155,063 | $ | 764,343 | |||||
We consider an automobile contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following due date, which date may have been extended within limits specified in the servicing agreements. The period of delinquency is based on the number of days payments are contractually past due, as extended where applicable. Automobile contracts less than 31 days delinquent are not included. In certain circumstances we will grant obligors one-month payment extensions to assist them with temporary cash flow problems. The only modification of terms is to advance the obligor’s next due date by one month and extend the maturity date of the receivable by one month. In certain limited cases, a two-month extension may be granted. There are no other concessions such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, we consider such extensions to be insignificant delays in payments rather than troubled debt restructurings. The following table summarizes the delinquency status of finance receivables as of December 31, 2013 and 2012: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Delinquency Status | |||||||||
Current | $ | 1,125,926 | $ | 764,741 | |||||
31 - 60 days | 21,421 | 16,925 | |||||||
61 - 90 days | 4,663 | 9,019 | |||||||
91 + days | 10,940 | 5,101 | |||||||
$ | 1,182,950 | $ | 795,786 | ||||||
Finance receivables totaling $10.9 million and $5.1 million at December 31, 2013 and 2012, respectively, have been placed on non-accrual status as a result of their delinquency status. | |||||||||
The following table presents a summary of the activity for the allowance for finance credit losses, for the years ended December 31, 2013 and 2012: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Balance at beginning of year | $ | 19,594 | $ | 10,351 | |||||
Provision for credit losses | 76,869 | 33,495 | |||||||
Charge-offs | (69,455 | ) | (37,638 | ) | |||||
Recoveries | 12,618 | 13,386 | |||||||
Balance at end of year | $ | 39,626 | $ | 19,594 | |||||
Excluded from finance receivables are contracts that were previously classified as finance receivables but were reclassified as other assets because we have repossessed the vehicle securing the Contract. The following table presents a summary of such repossessed inventory together with the allowance for losses on repossessed inventory: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Gross balance of repossessions in inventory | $ | 24,743 | $ | 12,102 | |||||
Allowance for losses on repossessed inventory | (14,779 | ) | (6,384 | ) | |||||
Net repossessed inventory included in other assets | $ | 9,964 | $ | 5,718 | |||||
4_Finance_Receivables_Measured
4. Finance Receivables Measured at Fair Value | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Finance Receivables Measured At Fair Value | ' | ||||||||
Finance Receivables Measured at Fair Value | ' | ||||||||
In September 2011 we purchased approximately $217.8 million of finance receivables from Fireside Bank. These receivables are recorded on our balance sheet at fair value. | |||||||||
The following table presents the components of Finance receivables measured at fair value and includes $120,000 and $703,000 in repossessed inventory at December 31, 2013 and December 31, 2012, respectively: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Finance receivables measured at fair value | (In thousands) | ||||||||
Finance receivables and accrued interest, net of unearned interest | $ | 14,786 | $ | 60,804 | |||||
Less: Fair value adjustment | (310 | ) | (1,136 | ) | |||||
Finance receivables measured at fair value | $ | 14,476 | $ | 59,668 | |||||
The following table summarizes the delinquency status of finance receivables measured at fair value as of December 31, 2013 and December 31, 2012: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Delinquency Status | |||||||||
Current | $ | 13,421 | $ | 57,556 | |||||
31 - 60 days | 878 | 2,206 | |||||||
61 - 90 days | 253 | 710 | |||||||
91 + days | 234 | 332 | |||||||
$ | 14,786 | $ | 60,804 | ||||||
5_Residual_Interest_in_Securit
5. Residual Interest in Securitizations | 12 Months Ended |
Dec. 31, 2013 | |
Residual Interest In Securitizations | ' |
Note 5 - Residual Interest in Securitizations | ' |
(5) Residual Interest in Securitizations | |
In September 2008 we completed a structured loan sale in which we retained a residual interest. The remaining receivables from such transaction were re-securitized in September 2010. The residual interest from this transaction was $854,000 and $4.8 million as of December 31, 2013 and 2012, respectively, and was determined using a discounted cash flow model that included estimates for prepayments and losses. The discount rate utilized was 20%. The assumptions utilized were based on our historical performance adjusted for current market conditions. | |
6_Furniture_and_Equipment
6. Furniture and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Note 6 - Furniture and Equipment | ' | ||||||||
The following table presents the components of furniture and equipment: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Furniture and fixtures | $ | 1,141 | $ | 1,139 | |||||
Computer and telephone equipment | 4,094 | 3,619 | |||||||
Leasehold improvements | 633 | 633 | |||||||
5,868 | 5,391 | ||||||||
Less: accumulated depreciation and amortization | (5,102 | ) | (4,665 | ) | |||||
$ | 766 | $ | 726 | ||||||
Depreciation expense totaled $437,000 and $543,000 for the years ended December 31, 2013 and 2012, respectively. | |||||||||
7_Securitization_Trust_Debt
7. Securitization Trust Debt | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||
Securitization Trust Debt Tables | ' | ||||||||||||||||||||||
Securitization Trust Debt | ' | ||||||||||||||||||||||
We have completed numerous term securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our consolidated balance sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table: | |||||||||||||||||||||||
Final Scheduled | Receivables Pledged at | Outstanding Principal at | Outstanding Principal at | Weighted Average Interest Rate at | |||||||||||||||||||
Payment | December 31, | Initial | December 31, | December 31, | December 31, | ||||||||||||||||||
Series | Date (1) | 2013 (2) | Principal | 2013 | 2012 | 2013 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
CPS 2008-A | Oct-14 | $ | – | $ | 310,359 | $ | – | $ | 40,713 | – | |||||||||||||
Page Five Funding | Jan-18 | 11,038 | 46,058 | 9,358 | 21,251 | 9.37% | |||||||||||||||||
CPS 2011-A | Apr-18 | 28,278 | 100,364 | 24,526 | 48,368 | 3.42% | |||||||||||||||||
CPS 2011-B | Sep-18 | 44,704 | 109,936 | 44,433 | 70,863 | 4.67% | |||||||||||||||||
CPS 2011-C | Mar-19 | 56,232 | 119,400 | 56,271 | 88,269 | 5.01% | |||||||||||||||||
CPS 2012-A | Jun-19 | 65,557 | 155,000 | 65,051 | 105,485 | 3.56% | |||||||||||||||||
CPS 2012-B | Sep-19 | 86,555 | 141,500 | 86,254 | 122,329 | 3.24% | |||||||||||||||||
CPS 2012-C | Dec-19 | 93,098 | 147,000 | 93,006 | 135,219 | 2.59% | |||||||||||||||||
CPS 2012-D | Mar-20 | 111,633 | 160,000 | 108,815 | 160,000 | 2.17% | |||||||||||||||||
CPS 2013-A | Jun-20 | 152,575 | 185,000 | 142,842 | – | 1.90% | |||||||||||||||||
CPS 2013-B | Sep-20 | 179,952 | 205,000 | 172,499 | – | 2.32% | |||||||||||||||||
CPS 2013-C | Dec-20 | 194,810 | 205,000 | 191,504 | – | 2.41% | |||||||||||||||||
CPS 2013-D (3) | Mar-21 | 117,804 | 183,000 | 183,000 | – | 2.19% | |||||||||||||||||
$ | 1,142,236 | $ | 2,067,617 | $ | 1,177,559 | $ | 792,497 | ||||||||||||||||
_________________________ | |||||||||||||||||||||||
-1 | The Final Scheduled Payment Date represents final legal maturity of the securitization trust debt. Securitization trust debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the Trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $445.7 million in 2014, $345.1 million in 2015, $216.6 million in 2016, $117.0 million in 2017, $40.3 million in 2018, and $12.9 million in 2019. | ||||||||||||||||||||||
-2 | Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheet. | ||||||||||||||||||||||
-3 | An additional $63.4 million of receivables were pledged to CPS 2013-D in January 2014. | ||||||||||||||||||||||
All of the securitization trust debt was issued in private placement transactions to qualified institutional investors. The debt was issued by our wholly-owned, bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by any of our other assets. | |||||||||||||||||||||||
The terms of the various securitization agreements related to the issuance of the securitization trust debt require that certain delinquency and credit loss criteria be met with respect to the collateral pool, and require that we maintain minimum levels of liquidity and net worth and not exceed maximum leverage levels. We were in compliance with all such covenants as of December 31, 2013. | |||||||||||||||||||||||
We are responsible for the administration and collection of the contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional credit enhancement for the Notes or to be applied to make payments on the securitization trust debt. As of December 31, 2013, restricted cash under the various agreements totaled approximately $132.3 million. This amount includes $63.4 million in pre-funding proceeds related to CPS 2013-D. Interest expense on the securitization trust debt is composed of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, insurance premiums, amortization of transaction costs, and amortization of discounts required on the notes at the time of issuance. Deferred financing costs related to the securitization trust debt are amortized using the interest method. Accordingly, the effective cost of borrowing of the securitization trust debt is greater than the stated rate of interest. | |||||||||||||||||||||||
Our wholly-owned, bankruptcy remote subsidiaries were formed to facilitate the above asset-backed financing transactions. Similar bankruptcy remote subsidiaries issue the debt outstanding under our warehouse line of credit. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. All such transactions, treated as secured financings for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of these subsidiaries are available to pay any of our other creditors. |
8_Debt
8. Debt | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||
Debt | ' | ||||||||||||||||
The terms of our debt outstanding at December 31, 2013 and 2012 are summarized below: | |||||||||||||||||
Amount Outstanding at | |||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Description | Interest Rate | Maturity | |||||||||||||||
Warehouse lines of credit | 5.73% over one month Libor (Minimum 6.73%) | Mar-17 | $ | 9,452 | $ | 4,358 | |||||||||||
6.00% over one month Libor (Minimum 6.75%) | Jun-16 | – | 17,373 | ||||||||||||||
Residual interest financing | 12.875% over one month Libor | Sep-13 | – | 13,773 | |||||||||||||
11.75% over one month Libor | Apr-18 | 19,096 | – | ||||||||||||||
Debt secured by receivables measured at fair value | n/a | Repayment is based on payments from underlying receivables. Final payment of the 8.00% loan was made in September 2013, with residual payments extending through 2016 | 13,117 | 57,107 | |||||||||||||
Senior secured debt, related party | 13.0% and 16.0% at December 31, 2013 and 2012, respectively | Jun-14 | 37,128 | 50,135 | |||||||||||||
5.00% | Jun-14 | 1,431 | – | ||||||||||||||
Subordinated renewable notes | Weighted average rate of 12.5% and 14.4% at December 31, 2013 and 2012, respectively | Weighted average maturity of July 2015 and June 2015 at December 31, 2013 and 2012, respectively | 19,142 | 23,281 | |||||||||||||
$ | 99,366 | $ | 166,027 | ||||||||||||||
In March 2013 we renewed our $100 million warehouse credit line with affiliates of Goldman, Sachs & Co. and Fortress Investment Group. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Six Funding LLC. The facility provides for advances up to 88% of eligible finance receivables and the loans under it accrue interest at a rate of one-month LIBOR plus 5.73% per annum, with a minimum rate of 6.73% per annum. There was $9.5 million outstanding under this facility at December 31, 2013. This facility has a revolving period through March 2015 and an amortization period through March 2017 for any receivables pledged to the facility at the end of the revolving period. | |||||||||||||||||
In June 2013, we renewed our $100 million warehouse credit line with Citibank, N.A. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Eight Funding, LLC. The facility provides for effective advances up to 88.4% of eligible finance receivables. The loans under the facility accrue interest at one-month LIBOR plus 6.00% per annum, with a minimum rate of 6.75% per annum. At December 31, 2013 there was no amount outstanding under this facility, which has a revolving period through June 2015 and an amortization period through June 2016 for any receivables pledged at the end of the revolving period. | |||||||||||||||||
The total outstanding debt on our warehouse lines of credit was $9.5 million as of December 31, 2013, compared to $21.7 million outstanding as of December 31, 2012. | |||||||||||||||||
The costs incurred in conjunction with the above debt are recorded as deferred financing costs on the accompanying consolidated balance sheets and are more fully described in Note 1. | |||||||||||||||||
We must comply with certain affirmative and negative covenants related to debt facilities, which require, among other things, that we maintain certain financial ratios related to liquidity, net worth and capitalization. Further covenants include matters relating to investments, acquisitions, restricted payments and certain dividend restrictions. See the discussion of financial covenants in Note 1. | |||||||||||||||||
The following table summarizes the contractual and expected maturity amounts of long term debt as of December 31, 2013: | |||||||||||||||||
Contractual maturity date | Residual | Senior | Subordinated | Total | |||||||||||||
interest | secured | renewable | |||||||||||||||
financing (1) | debt (2) | notes | |||||||||||||||
(In thousands) | |||||||||||||||||
2014 | $ | 6,333 | $ | 38,559 | $ | 11,400 | $ | 56,292 | |||||||||
2015 | 3,202 | – | 2,480 | 5,682 | |||||||||||||
2016 | 1,159 | – | 3,267 | 4,426 | |||||||||||||
2017 | 4,300 | – | 212 | 4,512 | |||||||||||||
2018 | 4,102 | – | 565 | 4,667 | |||||||||||||
Thereafter | – | – | 1,218 | 1,218 | |||||||||||||
Total | $ | 19,096 | $ | 38,559 | $ | 19,142 | $ | 76,797 | |||||||||
_________________________ | |||||||||||||||||
-1 | The residual interest financing debt has a contractual maturity date in April 2018. This debt is expected to become due and payable prior to that date, based on the decreasing valuation of the underlying collateral. | ||||||||||||||||
-2 | The senior secured debt is shown net of unamortized debt discounts of $623,000. On a gross basis the scheduled maturity of this debt is $39.2 million in June 2014. On January 31, 2014, we prepaid $10.0 million of our senior secured debt prior to its contractual maturity in June 2014. | ||||||||||||||||
-3 | Debt secured by receivables measured at fair value, in the amount of $13.1 million as of December 31, 2013, is omitted from this table because it becomes due as and when the related receivables balance is reduced by payments and charge-offs. | ||||||||||||||||
9_Shareholders_Equity
9. Shareholders' Equity | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Equity [Abstract] | ' | ||||||||||
Note 9 - Shareholders' Equity | ' | ||||||||||
Common Stock | |||||||||||
Holders of common stock are entitled to such dividends as our Board of Directors, in its discretion, may declare out of funds available, subject to the terms of any outstanding shares of preferred stock and other restrictions. In the event of liquidation of the Company, holders of common stock are entitled to receive, pro rata, all of the assets of the Company available for distribution, after payment of any liquidation preference to the holders of outstanding shares of preferred stock. Holders of the shares of common stock have no conversion or preemptive or other subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. | |||||||||||
We are required to comply with various operating and financial covenants defined in the agreements governing the warehouse lines of credit, senior debt, residual interest financing and subordinated debt. The covenants for the senior debt, residual interest financing and subordinated debt restrict the payment of certain distributions, including dividends (See Note 8). | |||||||||||
Stock Purchases | |||||||||||
At five different times between 2000 and 2011, our Board of Directors has authorized the repurchase of up to $34.5 million of our securities. As of December 31, 2013, we had purchased $5.0 million principal amount of debt securities, and $28.4 million of our common stock, representing 9,800,720 shares. There is approximately $1.0 million remaining under such plans, which have no expiration date. | |||||||||||
Options and Warrants | |||||||||||
In 2006, the Company adopted and its shareholders approved the CPS 2006 Long-Term Equity Incentive Plan (the “2006 Plan”) pursuant to which our Board of Directors, or a duly-authorized committee thereof, may grant stock options, restricted stock, restricted stock units and stock appreciation rights to our employees or employees of our subsidiaries, to directors of the Company, and to individuals acting as consultants to the Company or its subsidiaries. In June 2008, May 2012 and again in April 2013, the shareholders of the Company approved an amendment to the 2006 Plan to increase the maximum number of shares that may be subject to awards under the 2006 Plan to 5,000,000, 7,200,000 and 12,200,000, respectively, in each case plus shares authorized under prior plans and not issued. Options that have been granted under the 2006 Plan and a previous plan approved in 1997 have been granted at an exercise price equal to (or greater than) the stock’s fair market value at the date of the grant, with terms generally of 10 years and vesting generally over five years. | |||||||||||
The per share weighted-average fair value of stock options granted during the years ended December 31, 2013 and 2012 was $4.79 and $1.15, respectively. That fair value was estimated using the Black-Scholes option pricing model using the weighted average assumptions noted in the following table. We use historical data to estimate the expected term of each option. The volatility estimate is based on the historical volatility of our stock over the period that equals the expected life of the option. Volatility assumptions ranged from 50% to 85% for 2013 and 54% to 82% for 2012. The risk-free interest rate is based on the yield on a U.S. Treasury bond with a maturity comparable to the expected life of the option. The dividend yield is estimated to be zero based on our intention not to issue dividends for the foreseeable future. | |||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | ||||||||||
Expected life (years) | 5.41 | 5.63 | |||||||||
Risk-free interest rate | 0.73% | 1.32% | |||||||||
Volatility | 80% | 79% | |||||||||
Expected dividend yield | – | – | |||||||||
For the year ended December 31, 2013 and 2012, we recorded stock-based compensation costs in the amount of $3.9 million and $1.1 million, respectively. As of December 31, 2013, the unrecognized stock-based compensation costs to be recognized over future periods was equal to $12.5 million. This amount will be recognized as expense over a weighted-average period of 3.5 years. | |||||||||||
At December 31, 2013 and 2012, the options outstanding and exercisable had intrinsic values of $61.6 million and $41.7 million, respectively. The total intrinsic value of options exercised was $8.1 million and $1.2 million for the year ended December 31, 2013 and 2012, respectively. New shares were issued for all options exercised during the year ended December 2013 and cash of $2.1 million was received. A tax benefit of $1.2 million was recorded for the options exercised in 2013. At December 31, 2013, there were a total of 4.0 million additional shares available for grant under the 2006 Plan. | |||||||||||
Stock option activity for the year ended December 31, 2013 for stock options under the 2006 and 1997 plans is as follows: | |||||||||||
Weighted | |||||||||||
Number of | Weighted | Average | |||||||||
Shares | Average | Remaining | |||||||||
(in thousands) | Exercise Price | Contractual Term | |||||||||
Options outstanding at the beginning of period | 8,652 | $ | 1.58 | N/A | |||||||
Granted | 3,040 | 7.43 | N/A | ||||||||
Exercised | (1,413 | ) | 1.5 | N/A | |||||||
Forfeited/Expired | (151 | ) | 4.64 | N/A | |||||||
Options outstanding at the end of period | 10,128 | $ | 3.3 | 6.40 years | |||||||
Options exercisable at the end of period | 5,777 | $ | 2.17 | 4.96 years | |||||||
The per share weighted average exercise price of stock options granted whose exercise price was equal to the market price of the stock on the grant date during the years ended December 31, 2013 and 2012, was $7.43 and $1.72, respectively. We did not issue any stock options with an exercise price above or below the market price of the stock on the grant date for the years ended December 31, 2013 and 2012. | |||||||||||
On June 30, 2008, we entered into a series of agreements pursuant to which a lender purchased a $10 million five-year, fixed rate, senior secured note from us. In July 2008, in conjunction with the amendment of the residual interest financing as discussed above, the lender purchased an additional $15 million note with substantially the same terms as the $10 million note. Pursuant to the June 30, 2008 securities purchase agreement, we issued to the lender 1,225,000 shares of common stock. In addition, we issued the lender two warrants: (i) warrants that we refer to as the FMV Warrants, which were exercisable for 1,611,114 shares of our common stock, at an exercise price of $1.39818 per share, and (ii) warrants that we refer to as the N Warrants, which were exercisable for 285,781 shares of our common stock, at a nominal exercise price. Both the FMV Warrants and the N Warrants were exercised in November 2013. | |||||||||||
In connection with the amendment to and partial repayment of our residual interest financing in July 2008, we issued warrants excercisable for 2,500,000 common shares for $4,071,429. The warrants represent the right to purchase 2,500,000 CPS common shares at a nominal exercise price, at any time prior to July 10, 2018. In March 2010 we repurchased warrants for 500,000 of these shares for $1.0 million. Warrants to purchase 2,000,000 shares remain outstanding as of December 31, 2013. | |||||||||||
A warrant to purchase 1,162,270 shares of our common shares at an exercise price of $0.876 per share, which was issued in connection with our $50 million revolving credit facility established in September 2009, was exercised by the lender in April 2013. | |||||||||||
Warrants to purchase 500,000 of our common shares at an exercise price of $1.41 per share were issued to certain note purchasers in our March 2010 $50 million term funding facility. Warrants to purchase 409,390 shares remain outstanding as of December 31, 2013. |
10_Interest_Income
10. Interest Income | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Interest Income | ' | ||||||||
Interest Income | ' | ||||||||
The following table presents the components of interest income: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Interest on finance receivables | $ | 231,320 | $ | 174,019 | |||||
Residual interest income | – | 458 | |||||||
Other interest income | 10 | 837 | |||||||
Interest income | $ | 231,330 | $ | 175,314 | |||||
11_Income_Taxes
11. Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Income Taxes | ' | ||||||||
Income taxes consist of the following: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Current federal tax expense | $ | 977 | $ | 369 | |||||
Current state tax expense | 365 | 49 | |||||||
Deferred federal tax expense | 13,306 | 2,826 | |||||||
Deferred state tax expense (benefit) | 1,520 | (654 | ) | ||||||
Change in valuation allowance | – | (62,811 | ) | ||||||
Income tax expense (benefit) | $ | 16,168 | $ | (60,221 | ) | ||||
Income tax expense/(benefit) for the years ended December 31, 2013 and 2012 differs from the amount determined by applying the statutory federal rate of 35% to income before income taxes as follows: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Expense at federal tax rate | $ | 13,011 | $ | 3,215 | |||||
State taxes, net of federal income tax effect | 2,079 | 1,190 | |||||||
Other adjustments to tax reserve | (419 | ) | (1,153 | ) | |||||
Effect of change in state tax rate | (239 | ) | (1,105 | ) | |||||
Change in valuation allowance | – | (62,811 | ) | ||||||
Stock-based compensation | 911 | 321 | |||||||
Non-deductible expenses | 619 | 63 | |||||||
Other | 206 | 59 | |||||||
$ | 16,168 | $ | (60,221 | ) | |||||
The tax effected cumulative temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2013 and 2012 are as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Deferred Tax Assets: | |||||||||
Finance receivables | $ | 17,258 | $ | 10,840 | |||||
Accrued liabilities | 5,079 | 1,605 | |||||||
Furniture and equipment | 196 | 213 | |||||||
NOL carryforwards | 23,811 | 48,140 | |||||||
Built in losses | 13,074 | 14,406 | |||||||
Pension accrual | – | 2,080 | |||||||
AMT credit carryforward | 1,993 | 695 | |||||||
Other | 839 | 712 | |||||||
Total deferred tax assets | 62,250 | 78,691 | |||||||
Deferred Tax Liabilities: | |||||||||
FAS 91 deferred costs | (1,555 | ) | (1,114 | ) | |||||
Pension accrual | (1,136 | ) | – | ||||||
Investment residual | (344 | ) | (1,937 | ) | |||||
Total deferred tax liabilities | (3,035 | ) | (3,051 | ) | |||||
Net deferred tax asset | $ | 59,215 | $ | 75,640 | |||||
We acquired certain net operating losses and built-in loss assets as part of our acquisitions of MFN Financial Corp. (“MFN”) in 2002 and TFC Enterprises, Inc. (“TFC”) in 2003. Moreover, both MFN and TFC have undergone an ownership change for purposes of Internal Revenue Code (“IRC”) Section 382. In general, IRC Section 382 imposes an annual limitation on the ability of a loss corporation (that is, a corporation with a net operating loss (“NOL”) carryforward, credit carryforward, or certain built-in losses (“BILs”)) to utilize its pre-change NOL carryforwards or BILs to offset taxable income arising after an ownership change. | |||||||||
In determining the possible future realization of deferred tax assets, we have considered future taxable income from the following sources: (a) reversal of taxable temporary differences; and (b) tax planning strategies that, if necessary, would be implemented to accelerate taxable income into years in which net operating losses might otherwise expire. | |||||||||
Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. A valuation allowance is recognized for a deferred tax asset if, based on the weight of the available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. In making such judgements, significant weight is given to evidence that can be objectively verified. As a result of the unprecedented adverse changes in the market for securitizations, the recession and the resulting high levels of unemployment that occurred in 2008 and 2009, we incurred substantial operating losses from 2009 through 2011 which led us to establish a valuation allowance against a substantial portion of our deferred tax assets. We determined at December 31, 2012 that, based on the weight of the available objective evidence, it was more likely than not that we would generate sufficient future taxable income to utilize our net deferred tax assets. Accordingly, we reversed the related valuation allowance of $62.8 million in the fourth quarter of 2012. | |||||||||
Although realization is not assured, we believe that the realization of the recognized net deferred tax asset of $59.2 million as of December 31, 2013 is more likely than not based on forecasted future net earnings. Our net deferred tax asset of $59.2 million consists of approximately $47.8 million of net U.S. federal deferred tax assets and $11.4 million of net state deferred tax assets. The major components of the deferred tax asset are $36.9 million in net operating loss carryforwards and built in losses and $22.3 million in net deductions which have not yet been taken on a tax return. | |||||||||
As of December 31, 2013, we had net operating loss carryforwards for federal and state income tax purposes of $48.4 million and $129.8 million, respectively. The federal net operating losses begin to expire in 2022. The state net operating losses begin to expire in 2014. | |||||||||
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits including interest and penalties for the year: | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Unrecognized tax benefit - opening balance | $ | 1,331 | $ | 2,405 | |||||
Gross increases - tax positions in prior period | – | – | |||||||
Gross decreases - tax positions in current period | – | – | |||||||
Gross increases - tax positions in current period | – | 250 | |||||||
Settlements | (686 | ) | (153 | ) | |||||
Lapse of statute of limitations | (645 | ) | (1,171 | ) | |||||
Unrecognized tax benefit - ending balance | $ | – | $ | 1,331 | |||||
We recognize a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. We recognize potential interest and penalties related to unrecognized tax benefits as income tax expense. At December 31, 2013, we had no unrecognized tax benefits for uncertain tax positions. | |||||||||
We are subject to taxation in the US and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2010. |
12_Related_Party_Transactions
12. Related Party Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
Note 12 - Related Party Transactions | ' |
In December 2007, one of our directors purchased a $4.0 million subordinated renewable note pursuant to our ongoing program of issuing such notes to the public. The note was purchased through the registered agent and under the same terms and conditions, including the interest rate, that were offered to other purchasers at the time the note was issued. As of December 31, 2013, $4.0 million remains outstanding on this note. |
13_Commitments_and_Contingenci
13. Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Note 13 - Commitments and Contingencies | ' | ||||
Leases | |||||
The Company leases its facilities and certain computer equipment under non-cancelable operating leases, which expire through 2018. Future minimum lease payments at December 31, 2013, under these leases are due during the years ended December 31 as follows: | |||||
Amount | |||||
(In thousands) | |||||
2014 | $ | 3,249 | |||
2015 | 3,339 | ||||
2016 | 2,898 | ||||
2017 | 1,580 | ||||
2018 | 1,228 | ||||
Thereafter | 810 | ||||
Total minimum lease payments | $ | 13,104 | |||
Rent expense for the years ended December 31, 2013 and 2012, was $2.6 million and $2.9 million, respectively. | |||||
Our facility leases contain certain rental concessions and escalating rental payments, which are recognized as adjustments to rental expense and are amortized on a straight-line basis over the terms of the leases. | |||||
Litigation | |||||
Stanwich Litigation. We were for some time a defendant in a class action (the “Stanwich Case”) brought in the California Superior Court, Los Angeles County. The original plaintiffs in that case were persons entitled to receive regular payments (the “Settlement Payments”) pursuant to earlier settlements of claims, generally personal injury claims, against unrelated defendants. Stanwich Financial Services Corp. (“Stanwich”), an affiliate of the former chairman of our board of directors, is the entity that was obligated to pay the Settlement Payments. Stanwich defaulted on its payment obligations to the plaintiffs and in June 2001 filed for reorganization under the Bankruptcy Code, in the federal bankruptcy court in Connecticut. By February 2005, we had settled all claims brought against us in the Stanwich Case. | |||||
In November 2001, one of the defendants in the Stanwich Case, Jonathan Pardee, asserted claims for indemnity against us in a separate action, which is now pending in federal district court in Rhode Island. We have filed counterclaims in the Rhode Island federal court against Mr. Pardee, and have filed a separate action against Mr. Pardee's Rhode Island attorneys, in the same court. The litigation between Mr. Pardee and us was stayed for several years through September 2011, awaiting resolution of an adversary action brought against Mr. Pardee in the bankruptcy court, which is hearing the bankruptcy of Stanwich. | |||||
Pursuant to an agreement with the representative of creditors in the Stanwich bankruptcy, that adversary action has been dismissed. Under that agreement, we paid the bankruptcy estate $800,000 and abandoned our claims against the estate, while the estate has abandoned its adversary action against Mr. Pardee. With the dismissal of the adversary action, all known claims asserted against Mr. Pardee have been resolved without his incurring any liability. Accordingly, we believe that this resolution of the adversary action will result in limitation of our exposure to Mr. Pardee to no more than some portion of his attorneys fees incurred. The stay in the action against us in Rhode Island has been lifted, and both we and Mr. Pardee filed motions for summary judgment. The court ruled on those motions in February 2013, denying our motion, and granting Mr. Pardee’s motion as to liability. The issues remaining for trial are the extent of our obligation to indemnify Mr. Pardee. There is no trial date set, but our expectation is that the court may, not earlier than May 2014, set the matter for trial in the latter half of 2014. | |||||
Consumer Litigation. We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Consumers can and do initiate lawsuits against us alleging violations of law applicable to collection of receivables, and such lawsuits sometimes allege that resolution as a class action is appropriate. We are currently defending two such purported class actions, one of which has been settled by agreement with the plaintiffs (such settlement remains subject to approval by the court). For the most part, we have legal and factual defenses to such claims, which we routinely contest or settle (for immaterial amounts) depending on the particular circumstances of each case. We have recorded a liability as of December 31, 2013 with respect to such matters, in the aggregate. | |||||
FTC Action. On July 17, 2013, the staff of the Federal Trade Commission (“FTC”) advised us that they are prepared to recommend that the FTC initiate a lawsuit against us relating to allegedly unfair trade practices, and simultaneously advised that settlement of such issues by consent decree may be possible. Based on our review of the FTC’s allegations, of past practices of the FTC, of our records of our collection and servicing activities, and of other companies’ settlements with the FTC, we expect that we will reach such a settlement, and that such a settlement will require that we make restitutionary payments and that we implement procedural changes under a consent decree. There can be no assurance, however, that we will reach agreement regarding any such settlement, and we may choose to contest the allegations of the FTC. Whether we reach such an agreement or not, the cost to us of contesting or settling the matter may be material. We have recorded a liability as of December 31, 2013 with respect to this matter. | |||||
In General. There can be no assurance as to the outcomes of any of the matters referenced above. We have recorded a liability as of December 31, 2013, which represents our best estimate of probable incurred losses for legal contingencies, including all of the matters described or referenced above. The amount of losses that may ultimately be incurred cannot be estimated with certainty. However, based on such information as is available to us, we believe that the range of reasonably possible losses for the legal proceedings and contingencies described or referenced above, as of December 31, 2013, and in excess of the liability we have recorded, is from $0 to $1.6 million. | |||||
Accordingly, we believe that the ultimate resolution of such legal proceedings and contingencies, after taking into account our current litigation reserves, should not have a material adverse effect on our consolidated financial condition. We note, however, that in light of the uncertainties inherent in contested proceedings, there can be no assurance that the ultimate resolution of these matters will not significantly exceed the reserves we have accrued; as a result, the outcome of a particular matter may be material to our operating results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of our income for that period. |
14_Employee_Benefits
14. Employee Benefits | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Employee Benefits | ' | ||||||||||||||||
Employee Benefits | ' | ||||||||||||||||
We sponsor a pretax savings and profit sharing plan (the “401(k) Plan”) qualified under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, eligible employees are able to contribute up to 15% of their compensation (subject to stricter limitation in the case of highly compensated employees). We may, at our discretion, match 100% of employees’ contributions up to $1,500 per employee per calendar year. Our contributions to the 401(k) Plan were $471,000 for the year ended December 31, 2013. We did not make any matching contributions in 2012. | |||||||||||||||||
We also sponsor a defined benefit plan, the MFN Financial Corporation Pension Plan (the “Plan”). The Plan benefits were frozen on June 30, 2001. | |||||||||||||||||
The following tables represents a reconciliation of the change in the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2013 and 2012: | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Change in Projected Benefit Obligation | |||||||||||||||||
Projected benefit obligation, beginning of year | $ | 21,792 | $ | 19,443 | |||||||||||||
Service cost | – | – | |||||||||||||||
Interest cost | 823 | 875 | |||||||||||||||
Assumption changes | (2,420 | ) | 2,332 | ||||||||||||||
Actuarial (gain) loss | (113 | ) | 2 | ||||||||||||||
Settlements | – | – | |||||||||||||||
Benefits paid | (1,241 | ) | (860 | ) | |||||||||||||
Projected benefit obligation, end of year | $ | 18,841 | $ | 21,792 | |||||||||||||
Change in Plan Assets | |||||||||||||||||
Fair value of plan assets, beginning of year | $ | 16,612 | $ | 10,613 | |||||||||||||
Return on assets | 6,009 | 5,439 | |||||||||||||||
Employer contribution | 389 | 1,473 | |||||||||||||||
Expenses | (105 | ) | (53 | ) | |||||||||||||
Settlements | – | – | |||||||||||||||
Benefits paid | (1,241 | ) | (860 | ) | |||||||||||||
Fair value of plan assets, end of year | $ | 21,664 | $ | 16,612 | |||||||||||||
Funded Status at end of year | $ | 2,823 | $ | (5,180 | ) | ||||||||||||
Additional Information | |||||||||||||||||
Weighted average assumptions used to determine benefit obligations and cost at December 31, 2013 and 2012 were as follows: | |||||||||||||||||
December, 31 | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted average assumptions used to determine benefit obligations | |||||||||||||||||
Discount rate | 4.75% | 3.91% | |||||||||||||||
Weighted average assumptions used to determine net periodic benefit cost | |||||||||||||||||
Discount rate | 3.91% | 4.60% | |||||||||||||||
Expected return on plan assets | 8.25% | 8.50% | |||||||||||||||
Our overall expected long-term rate of return on assets is 8.25% per annum as of December 31, 2013. The expected long-term rate of return is based on the weighted average of historical returns on individual asset categories, which are described in more detail below. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Amounts recognized on Consolidated Balance Sheet | |||||||||||||||||
Other assets | $ | 2,823 | $ | – | |||||||||||||
Other liabilities | – | (5,180 | ) | ||||||||||||||
Net amount recognized | $ | 2,823 | $ | (5,180 | ) | ||||||||||||
Amounts recognized in accumulated other comprehensive income consists of: | |||||||||||||||||
Net gain | $ | 1,367 | $ | 8,953 | |||||||||||||
Unrecognized transition asset | – | – | |||||||||||||||
Net amount recognized | $ | 1,367 | $ | 8,953 | |||||||||||||
Components of net periodic benefit cost | |||||||||||||||||
Interest cost | $ | 823 | $ | 875 | |||||||||||||
Expected return on assets | (1,335 | ) | (928 | ) | |||||||||||||
Amortization of transition asset | – | – | |||||||||||||||
Amortization of net loss | 484 | 680 | |||||||||||||||
Net periodic benefit cost | (28 | ) | 627 | ||||||||||||||
Settlement (gain)/loss | – | – | |||||||||||||||
Total | $ | (28 | ) | $ | 627 | ||||||||||||
Benefit Obligation Recognized in Other Comprehensive Income | |||||||||||||||||
Net gain | $ | (7,586 | ) | $ | (2,748 | ) | |||||||||||
Prior service cost (credit) | – | – | |||||||||||||||
Amortization of prior service cost | – | – | |||||||||||||||
Net amount recognized in other comprehensive income | $ | (7,586 | ) | $ | (2,748 | ) | |||||||||||
Accumulated Pension Benefit Obligation | $ | (1,095 | ) | $ | (5,637 | ) | |||||||||||
There is no estimated net loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2014. | |||||||||||||||||
The weighted average asset allocation of our pension benefits at December 31, 2013 and 2012 were as follows: | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted Average Asset Allocation at Year-End | |||||||||||||||||
Asset Category | |||||||||||||||||
Equity securities | 87% | 83% | |||||||||||||||
Debt securities | 13% | 16% | |||||||||||||||
Cash and cash equivalents | 0% | 1% | |||||||||||||||
Total | 100% | 100% | |||||||||||||||
Our investment policies and strategies for the pension benefits plan utilize a target allocation of 75% equity securities and 25% fixed income securities (excluding Company stock). Our investment goals are to maximize returns subject to specific risk management policies. We address risk management and diversification by the use of a professional investment advisor and several sub-advisors which invest in domestic and international equity securities and domestic fixed income securities. Each sub-advisor focuses its investments within a specific sector of the equity or fixed income market. For the sub-advisors focused on the equity markets, the sectors are differentiated by the market capitalization, the relative valuation and the location of the underlying issuer. For the sub-advisors focused on the fixed income markets, the sectors are differentiated by the credit quality and the maturity of the underlying fixed income investment. The investments made by the sub-advisors are readily marketable and can be sold to fund benefit payment obligations as they become payable. | |||||||||||||||||
Cash Flows | |||||||||||||||||
Estimated Future Benefit Payments (In thousands) | |||||||||||||||||
2014 | $ | 722 | |||||||||||||||
2015 | 816 | ||||||||||||||||
2016 | 828 | ||||||||||||||||
2017 | 862 | ||||||||||||||||
2018 | 894 | ||||||||||||||||
Years 2019 - 2023 | 5,075 | ||||||||||||||||
Anticipated Contributions in 2014 | $ | 562 | |||||||||||||||
The fair value of plan assets at December 31, 2013 and 2012, by asset category, is as follows: | |||||||||||||||||
31-Dec-13 | |||||||||||||||||
Level 1 (1) | Level 2 (2) | Level 3 (3) | Total | ||||||||||||||
Investment Name: | (in thousands) | ||||||||||||||||
Company Common Stock | $ | 8,319 | $ | – | $ | – | $ | 8,319 | |||||||||
Fundamental Value | – | 2,384 | – | 2,384 | |||||||||||||
Mid Cap Growth | – | 709 | – | 709 | |||||||||||||
Focus Value | – | 692 | – | 692 | |||||||||||||
Small Co. Value | – | 693 | – | 693 | |||||||||||||
Growth | – | 3,237 | – | 3,237 | |||||||||||||
International Growth | – | 2,855 | – | 2,855 | |||||||||||||
Core Bond | – | 1,870 | – | 1,870 | |||||||||||||
High Yield | – | 387 | – | 387 | |||||||||||||
Inflation Protected Bond | – | 487 | – | 487 | |||||||||||||
Money Market | – | 31 | – | 31 | |||||||||||||
Total | $ | 8,319 | $ | 13,345 | $ | – | $ | 21,664 | |||||||||
31-Dec-12 | |||||||||||||||||
Level 1 (1) | Level 2 (2) | Level 3 (3) | Total | ||||||||||||||
Investment Name: | (in thousands) | ||||||||||||||||
Company Common Stock | $ | 4,791 | $ | – | $ | – | $ | 4,791 | |||||||||
Fundamental Value | – | 2,049 | – | 2,049 | |||||||||||||
Mid Cap Growth | – | 596 | – | 596 | |||||||||||||
Focus Value | – | 607 | – | 607 | |||||||||||||
Small Co. Value | – | 604 | – | 604 | |||||||||||||
Growth | – | 2,681 | – | 2,681 | |||||||||||||
International Growth | – | 2,431 | – | 2,431 | |||||||||||||
Core Bond | – | 1,780 | – | 1,780 | |||||||||||||
Income | – | 363 | – | 363 | |||||||||||||
Inflation Protected Bond | – | 472 | – | 472 | |||||||||||||
Money Market | – | 238 | – | 238 | |||||||||||||
Total | $ | 4,791 | $ | 11,821 | $ | – | $ | 16,612 | |||||||||
________________________ | |||||||||||||||||
-1 | Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. | ||||||||||||||||
-2 | All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. | ||||||||||||||||
-3 | There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs. | ||||||||||||||||
15_Fair_Value_Measurements
15. Fair Value Measurements | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||||||
ASC 820, "Fair Value Measurements" clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. | |||||||||||||||||||||
ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The three levels are defined as follows: level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. | |||||||||||||||||||||
At the time of issuance, five warrants issued between 2008 and 2010 in conjunction with various debt financing transactions contained features that make them subject to derivative accounting. We valued these warrants using a binomial valuation model using a weighted average volatility assumption of 41%, weighted average term of 8 years and a risk free rate of 3.3%. On March 29, 2012 we agreed with the holders to amend three of the five warrants to remove the “down round,” or price reset, features that resulted in derivative accounting. On the date of the amendment, we valued each of the three warrants using a binomial pricing model as described above. The aggregate value of the three amended warrants of $1.1 million was then reclassified from Accounts Payable to Common Stock. On June 25, 2012 we agreed with the holder to amend one other warrant that contained the “down round” features to remove those specific price reset terms. The $251,000 aggregate value of this amended warrant was reclassified from Accounts Payable to Common Stock on the date of the amendment. The fifth warrant with the “down round” feature was exercised on February 22, 2013. The $583,000 intrinsic value of this warrant was reclassified from Accounts Payable to Common Stock on the date of the exercise. As of December 31, 2013 all five of the warrants issued that previously contained price reset features have either been amended or exercised and are no longer subject to quarterly valuations. | |||||||||||||||||||||
In September 2008 we sold automobile contracts in a securitization that was structured as a sale for financial accounting purposes. In that sale, we retained both securities and a residual interest in the transaction that are measured at fair value. In September 2010 we took advantage of improvement in the market for asset-backed securities by re-securitizing the underlying receivables from our unrated September 2008 securitization. We also sold the securities retained from the September 2008 transaction. No gain or loss was recorded as a result of the re-securitization transaction described above. We describe below the valuation methodologies we use for the securities retained and the residual interest in the cash flows of the transaction, as well as the general classification of such instruments pursuant to the valuation hierarchy. The residual interest in such securitization is $854,000 as of December 31, 2013 and $4.8 million as of December 31, 2012 and is classified as level 3 in the fair value hierarchy. We determine the value of that residual interest using a discounted cash flow model that includes estimates for prepayments and losses. We used a discount rate of 20% per annum and a cumulative net loss rate of 15% at December 31, 2013 and 14% at December 31, 2012. The assumptions we used are based on historical performance of automobile contracts we have originated and serviced in the past, adjusted for current market conditions. | |||||||||||||||||||||
In September 2011, we acquired $217.8 million of finance receivables from Fireside Bank for a purchase price of $199.6 million. The receivables were acquired by our wholly-owned special purpose subsidiary, CPS Fender Receivables, LLC, which issued a note for $197.3 million, with a fair value of $196.5 million. Since the Fireside receivables were originated by another entity with its own underwriting guidelines and procedures, we have elected to account for the Fireside receivables and the related debt secured by those receivables at their estimated fair values so that changes in fair value will be reflected in our results of operations as they occur. Interest income from the receivables and interest expense on the note are included in interest income and interest expense, respectively. Changes to the fair value of the receivables and debt are included in other income. Our level 3, unobservable inputs reflect our own assumptions about the factors that market participants use in pricing similar receivables and debt, and are based on the best information available in the circumstances. They include such inputs as estimated net charge-offs and timing of the amortization of the portfolio of finance receivables. Our estimate of the fair value of the Fireside receivables is performed on a pool basis, rather than separately on each individual receivable. The table below presents a reconciliation of the acquired finance receivables and related debt measured at fair value on a recurring basis using significant unobservable inputs: | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Finance Receivables Measured at Fair Value: | |||||||||||||||||||||
Balance at beginning of year | $ | 59,668 | $ | 160,253 | |||||||||||||||||
Payments on finance receivables at fair value | (43,122 | ) | (104,682 | ) | |||||||||||||||||
Charge-offs on finance receivables at fair value | (2,896 | ) | (6,681 | ) | |||||||||||||||||
Discount accretion | 1,421 | 4,144 | |||||||||||||||||||
Mark to fair value | (595 | ) | 6,634 | ||||||||||||||||||
Balance at end of year | $ | 14,476 | $ | 59,668 | |||||||||||||||||
Debt Secured by Finance Receivables Measured at Fair Value: | |||||||||||||||||||||
Balance at beginning of year | $ | 57,107 | $ | 166,828 | |||||||||||||||||
Principal payments on debt at fair value | (45,969 | ) | (121,413 | ) | |||||||||||||||||
Premium accretion | 2,726 | 4,579 | |||||||||||||||||||
Mark to fair value | (747 | ) | 7,113 | ||||||||||||||||||
Balance at end of year | 13,117 | 57,107 | |||||||||||||||||||
Reduction for payments collected and payable | (1,654 | ) | (5,548 | ) | |||||||||||||||||
Adjusted balance at end of year | $ | 11,463 | $ | 51,559 | |||||||||||||||||
The table below compares the fair values of the Fireside receivables and the related secured debt to their contractual balances for the periods shown: | |||||||||||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||||||||||
Contractual | Fair | Contractual | Fair | ||||||||||||||||||
Balance | Value | Balance | Value | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Fireside receivables portfolio | $ | 14,786 | $ | 14,476 | $ | 60,804 | $ | 59,668 | |||||||||||||
Debt secured by Fireside receivables portfolio | – | 13,117 | 41,365 | 57,107 | |||||||||||||||||
The fair value of the debt secured by the Fireside receivables portfolio represents the discounted value of future cash flows that we estimate will become due to the lender in accordance with the terms of our financing for the Fireside portfolio. The terms of the debt provide for the lenders to receive a share of residual cash flows from the underlying receivables after the contractual balance of the debt is repaid and the Company’s investment in the Fireside portfolio is returned. | |||||||||||||||||||||
Repossessed vehicle inventory, which is included in Other assets on our balance sheet, is measured at fair value using level 2 assumptions based on our actual loss experience on sale of repossessed vehicles. At December 31, 2013, the finance receivables related to the repossessed vehicles in inventory totaled $24.7 million. We have applied a valuation adjustment, or loss allowance, of $14.8 million, which is based on a recovery rate of approximately 40%, resulting in an estimated fair value and carrying amount of $10.0 million. The fair value and carrying amount of the repossessed inventory at December 31, 2012 was $5.7 million after applying a valuation adjustment of $6.4 million. | |||||||||||||||||||||
There were no transfers in or out of level 1 or level 2 assets and liabilities for 2013 and 2012. We have no level 3 assets that are measured at fair value on a non-recurring basis. The table below presents a reconciliation for level 3 assets measured at fair value on a recurring basis using significant unobservable inputs: | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Residual Interest in Securitizations: | |||||||||||||||||||||
Balance at beginning of year | $ | 4,824 | $ | 4,414 | |||||||||||||||||
Cash received during year | (3,970 | ) | (48 | ) | |||||||||||||||||
Included in earnings | – | 458 | |||||||||||||||||||
Balance at end of year | $ | 854 | $ | 4,824 | |||||||||||||||||
Warrant Derivative Liability: | |||||||||||||||||||||
Balance at beginning of year | $ | 355 | $ | 967 | |||||||||||||||||
Included in earnings | 228 | 695 | |||||||||||||||||||
Reclassification to equity | (583 | ) | (1,307 | ) | |||||||||||||||||
Balance at end of year | $ | – | $ | 355 | |||||||||||||||||
The following table provides certain qualitative information about our level 3 fair value measurements for assets and liabilities carried at fair value: | |||||||||||||||||||||
Financial Instrument | Fair Values as of | Inputs as of | |||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2013 | 2012 | Valuation Techniques | Unobservable Inputs | 2013 | 2012 | ||||||||||||||||
(In thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Finance receivables measured at fair value | Discount rate | 15.40% | 20.40% | ||||||||||||||||||
$ | 14,476 | $ | 59,668 | Discounted cash flows | Cumulative net losses | 5.00% | 5.50% | ||||||||||||||
Monthly average prepayments | 0.50% | 0.50% | |||||||||||||||||||
Residual interest in securitizations | Discount rate | 20.00% | 20.00% | ||||||||||||||||||
854 | 4,824 | Discounted cash flows | Cumulative net losses | 15.00% | 13.70% | ||||||||||||||||
Monthly average prepayments | 0.50% | 0.50% | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Stock price | n/a | $5.36/sh | |||||||||||||||||||
Warrant derivative liability | $ | – | $ | 355 | Binomial | Volatility | n/a | 40.00% | |||||||||||||
Risk free rate | n/a | 1.26% | |||||||||||||||||||
Debt secured by receivables measured at fair value | $ | 13,117 | 57,107 | Discounted cash flows | Discount rate | 12.20% | 16.20% | ||||||||||||||
The estimated fair values of financial assets and liabilities at December 31, 2013 and 2012, were as follows: | |||||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||
Financial Instrument | (In thousands) | ||||||||||||||||||||
Carrying | Fair Value Measurements Using: | ||||||||||||||||||||
Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 22,112 | $ | 22,112 | $ | – | $ | – | $ | 22,112 | |||||||||||
Restricted cash and equivalents | 132,284 | 132,284 | – | – | 132,284 | ||||||||||||||||
Finance receivables, net | 1,115,437 | – | – | 1,100,153 | 1,100,153 | ||||||||||||||||
Finance receivables measured at fair value | 14,476 | – | – | 14,476 | 14,476 | ||||||||||||||||
Residual interest in securitizations | 854 | – | – | 854 | 854 | ||||||||||||||||
Accrued interest receivable | 18,670 | – | – | 18,670 | 18,670 | ||||||||||||||||
Liabilities: | |||||||||||||||||||||
Warehouse lines of credit | $ | 9,452 | $ | – | $ | – | $ | 9,452 | $ | 9,452 | |||||||||||
Accrued interest payable | 2,908 | – | – | 2,908 | 2,908 | ||||||||||||||||
Residual interest financing | 19,096 | – | – | 19,096 | 19,096 | ||||||||||||||||
Debt secured by receivables measured at fair value | 13,117 | – | – | 13,117 | 13,117 | ||||||||||||||||
Securitization trust debt | 1,177,559 | – | – | 1,189,086 | 1,189,086 | ||||||||||||||||
Senior secured debt | 38,559 | – | – | 38,559 | 38,559 | ||||||||||||||||
Subordinated renewable notes | 19,142 | – | – | 19,142 | 19,142 | ||||||||||||||||
As of December 31, 2012 | |||||||||||||||||||||
Financial Instrument | (In thousands) | ||||||||||||||||||||
Carrying | Fair Value Measurements Using: | ||||||||||||||||||||
Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 12,966 | $ | 12,966 | $ | – | $ | – | $ | 12,966 | |||||||||||
Restricted cash and equivalents | 104,445 | 104,445 | – | – | 104,445 | ||||||||||||||||
Finance receivables, net | 744,749 | – | – | 740,511 | 740,511 | ||||||||||||||||
Finance receivables measured at fair value | 59,668 | – | – | 59,668 | 59,668 | ||||||||||||||||
Residual interest in securitizations | 4,824 | – | – | 4,824 | 4,824 | ||||||||||||||||
Accrued interest receivable | 10,411 | – | – | 10,411 | 10,411 | ||||||||||||||||
Liabilities: | |||||||||||||||||||||
Warrant derivative liability | $ | 355 | $ | – | $ | – | $ | 355 | $ | 355 | |||||||||||
Warehouse lines of credit | 21,731 | – | – | 21,731 | 21,731 | ||||||||||||||||
Accrued interest payable | 2,795 | – | – | 2,795 | 2,795 | ||||||||||||||||
Residual interest financing | 13,773 | – | – | 13,773 | 13,773 | ||||||||||||||||
Debt secured by receivables measured at fair value | 57,107 | – | – | 57,107 | 57,107 | ||||||||||||||||
Securitization trust debt | 792,497 | – | – | 803,290 | 803,290 | ||||||||||||||||
Senior secured debt | 50,135 | – | – | 50,135 | 50,135 | ||||||||||||||||
Subordinated renewable notes | 23,281 | – | – | 23,281 | 23,281 | ||||||||||||||||
The following summary presents a description of the methodologies and assumptions used to estimate the fair value of our financial instruments. Much of the information used to determine fair value is highly subjective. When applicable, readily available market information has been utilized. However, for a significant portion of our financial instruments, active markets do not exist. Therefore, significant elements of judgment were required in estimating fair value for certain items. The subjective factors include, among other things, the estimated timing and amount of cash flows, risk characteristics, credit quality and interest rates, all of which are subject to change. Since the fair value is estimated as of December 31, 2013 and 2012, the amounts that will actually be realized or paid at settlement or maturity of the instruments could be significantly different. | |||||||||||||||||||||
Cash, Cash Equivalents and Restricted Cash and Equivalents | |||||||||||||||||||||
The carrying value equals fair value. | |||||||||||||||||||||
Finance Receivables, net | |||||||||||||||||||||
The fair value of finance receivables is estimated by discounting future cash flows expected to be collected using current rates at which similar receivables could be originated. | |||||||||||||||||||||
Finance Receivables Measured at Fair Value and Debt Secured by Receivables Measured at Fair Value | |||||||||||||||||||||
The carrying value equals fair value. | |||||||||||||||||||||
Residual Interest in Securitizations | |||||||||||||||||||||
The fair value is estimated by discounting future cash flows using credit and discount rates that we believe reflect the estimated credit, interest rate and prepayment risks associated with similar types of instruments. | |||||||||||||||||||||
Accrued Interest Receivable and Payable | |||||||||||||||||||||
The carrying value approximates fair value because the related interest rates are estimated to reflect current market conditions for similar types of instruments. | |||||||||||||||||||||
Warrant Derivative Liability | |||||||||||||||||||||
The method used to estimate fair value is described above. | |||||||||||||||||||||
Warehouse Lines of Credit, Residual Interest Financing, Senior Secured Debt and Subordinated Renewable Notes | |||||||||||||||||||||
The carrying value approximates fair value because the related interest rates are estimated to reflect current market conditions for similar types of secured instruments. | |||||||||||||||||||||
Securitization Trust Debt | |||||||||||||||||||||
The fair value is estimated by discounting future cash flows using interest rates that we believe reflects the current market rates. |
1_Summary_of_Significant_Accou1
1. Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Description of Business | ' | ||||||||
Description of Business | |||||||||
Consumer Portfolio Services, Inc. ("CPS") was incorporated in California on March 8, 1991. CPS and its subsidiaries (collectively, the "Company") specialize in purchasing and servicing retail automobile installment sale contracts ("contracts") originated by licensed motor vehicle dealers ("Dealers") located throughout the United States. Dealers located in California, Texas, Pennsylvania, Illinois, Georgia and New Jersey represented 10.6%, 10.0%, 6.0%, 5.2%, 5.1% and 5.1%, respectively, of contracts purchased during 2013 compared with 13.5%, 9.5%, 9.2%, 4.3%, 5.0% and 4.1%, respectively in 2012. No other state had a concentration in excess of 5.0% in 2013. We specialize in contracts with borrowers who generally would not be expected to qualify for traditional financing provided by commercial banks or automobile manufacturers’ captive finance companies. | |||||||||
We are subject to various regulations and laws as they relate to the extension of credit in consumer credit transactions. Failure to comply with such laws and regulations could have a material adverse effect on the Company. | |||||||||
Basis of Presentation | ' | ||||||||
Principles of Consolidation | |||||||||
The Consolidated Financial Statements include the accounts of Consumer Portfolio Services, Inc. and its wholly-owned subsidiaries, certain of which are special purpose subsidiaries ("SPS"), formed to accommodate the structures under which we purchase and securitize our contracts. The Consolidated Financial Statements also include the accounts of CPS Leasing, Inc., an 80% owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Principles of Consolidation | ' | ||||||||
Principles of Consolidation | |||||||||
The Consolidated Financial Statements include the accounts of Consumer Portfolio Services, Inc. and its wholly-owned subsidiaries, certain of which are special purpose subsidiaries ("SPS"), formed to accommodate the structures under which we purchase and securitize our contracts. The Consolidated Financial Statements also include the accounts of CPS Leasing, Inc., an 80% owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Cash and Cash Equivalents | ' | ||||||||
Cash and Cash Equivalents | |||||||||
For purposes of the statements of cash flows, we consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of cash on hand and due from banks and money market accounts. Substantially all of our cash is deposited at three financial institutions. We maintain cash due from banks in excess of the banks' insured deposit limits. We do not believe we are exposed to any significant credit risk on these deposits. As part of certain financial covenants related to debt facilities, we are required to maintain a minimum unrestricted cash balance. As of December 31, 2013, our unrestricted cash balance was $22.1 million, which exceeded the minimum amounts required by our financial covenants. | |||||||||
Finance Receivables | ' | ||||||||
Finance Receivables | |||||||||
Finance receivables, which we have the intent and ability to hold for the foreseeable future or until maturity or payoff, are presented at cost. All finance receivable contracts are held for investment. Interest income is accrued on the unpaid principal balance. Origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Generally, payments received on finance receivables are restricted to certain securitized pools, and the related contracts cannot be resold. Finance receivables are charged off pursuant to the controlling documents of certain securitized pools, generally as described below under Charge Off Policy. Management may authorize an extension of payment terms if collection appears likely during the next calendar month. | |||||||||
Our portfolio of finance receivables consists of small-balance homogeneous contracts that are collectively evaluated for impairment on a portfolio basis. We report delinquency on a contractual basis. Once a Contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the Contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a Contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. | |||||||||
Allowance for Finance Credit Losses | ' | ||||||||
Allowance for Finance Credit Losses | |||||||||
In order to estimate an appropriate allowance for losses likely incurred on finance receivables, we use a loss allowance methodology commonly referred to as "static pooling," which stratifies the finance receivable portfolio into separately identified pools based on their period of origination, then uses historical performance of seasoned pools to estimate future losses on current pools. Historical loss experience is adjusted as necessary for current economic conditions. We consider our portfolio of finance receivables to be relatively homogenous and consequently we analyze credit performance primarily in the aggregate rather than stratification by any particular credit quality indicator. Using analytical and formula driven techniques, we estimate an allowance for finance credit losses, which we believe is adequate for probable incurred credit losses that can be reasonably estimated in our portfolio of finance receivable contracts. For each monthly pool of contracts that we purchase, we begin establishing the allowance in the month of acquisition and increase it over the subsequent 11 months, through a provision for credit losses charged to our consolidated statement of operations. Net losses incurred on finance receivables are charged to the allowance. We evaluate the adequacy of the allowance by examining current delinquencies, the characteristics of the portfolio, the value of the underlying collateral and historical loss trends. As conditions change, our level of provisioning and/or allowance may change. | |||||||||
Finance Receivables and Related Debt Measured at Fair Value | ' | ||||||||
Finance Receivables and Related Debt Measured at Fair Value | |||||||||
In September 2011, we acquired $217.8 million of finance receivables from Fireside Bank for a purchase price of $201.3 million. The receivables were acquired by our wholly-owned special purpose subsidiary, CPS Fender Receivables, LLC, which issued a note for $197.3 million, with a fair value of $196.5 million. | |||||||||
The receivables we acquired are pledged as collateral for debt that was structured specifically for the acquisition of this portfolio. Since the Fireside receivables were originated by another entity with its own underwriting guidelines and procedures, we elected to account for the Fireside receivables and the related debt secured by those receivables at their estimated fair values so that changes in fair value will be reflected in our results of operations as they occur. We use our own assumptions about the factors that we believe market participants would use in pricing similar receivables and debt, and are based on the best information available in the circumstances. The valuation method used to estimate fair value may produce a fair value measurement that may not be indicative of ultimate realizable value. Furthermore, while we believe our valuation methods are appropriate and consistent with those used by other market participants, the use of different methods or assumptions to estimate the fair value of certain financial instruments could result in different estimates of fair value. Those estimated values may differ significantly from the values that would have been used had a readily available market for such receivables or debt existed, or had such receivables or debt been liquidated, and those differences could be material to the financial statements. Interest income from the receivables and interest expense on the debt are included in interest income and interest expense, respectively. Changes to the fair value of the receivables and debt are also to be included in interest income and interest expense, respectively. | |||||||||
Charge Off Policy | ' | ||||||||
Charge Off Policy | |||||||||
Delinquent contracts for which the related financed vehicle has been repossessed are generally charged off at the earliest of (1) the month in which the proceeds from the sale of the financed vehicle are received, (2) the month in which 90 days have passed from the date of repossession or (3) the month in which the Contract becomes seven scheduled payments past due (see Repossessed and Other Assets below). The amount charged off is the remaining principal balance of the Contract, after the application of the net proceeds from the liquidation of the financed vehicle. With respect to delinquent contracts for which the related financed vehicle has not been repossessed, the remaining principal balance is generally charged off no later than the end of the month that the Contract becomes five scheduled payments past due. | |||||||||
Contract Acquisition Fees and Origination Costs | ' | ||||||||
Contract Acquisition Fees and Origination Costs | |||||||||
Upon purchase of a Contract from a Dealer, we generally either charge or advance the Dealer an acquisition fee. Dealer acquisition fees and deferred origination costs are applied to the carrying value of finance receivables and are accreted into earnings as an adjustment to the yield over the estimated life of the Contract using the interest method. | |||||||||
Repossessed and Other Assets | ' | ||||||||
Repossessed and Other Assets | |||||||||
If a Contract obligor fails to make or keep promises for payments, or if the obligor is uncooperative or attempts to evade contact or hide the vehicle, a supervisor will review the collection activity relating to the account to determine if repossession of the vehicle is warranted. Generally, such a decision is made between the 60th and 90th day past the obligor’s payment due date, but could occur sooner or later, depending on the specific circumstances. At the time the vehicle is repossessed we stop accruing interest on the Contract, and reclassify the remaining Contract balance to the line item "Other assets" on our Consolidated Balance Sheet at its estimated fair value less costs to sell. Included in other assets in the accompanying balance sheets are repossessed vehicles pending sale of $10.0 million and $5.7 million at December 31, 2013 and 2012, respectively. | |||||||||
Treatment of Securitizations | ' | ||||||||
Treatment of Securitizations | |||||||||
Our term securitization structure has generally been as follows: | |||||||||
We sell contracts we acquire to a wholly-owned special purpose subsidiary ("SPS"), which has been established for the limited purpose of buying and reselling our contracts. The SPS then transfers the same contracts to another entity, typically a statutory trust ("Trust"). The Trust issues interest-bearing asset-backed securities ("Notes"), in a principal amount equal to or less than the aggregate principal balance of the contracts. We typically sell these contracts to the Trust at face value and without recourse, except representations and warranties that we make to the Trust that are similar to those provided to us by the Dealer. One or more investors purchase the Notes issued by the Trust (the "Noteholders"); the proceeds from the sale of the Notes are then used to purchase the contracts from us. We may retain or sell subordinated Notes issued by the Trust. In addition, we have provided "Credit Enhancement" for the benefit of the Noteholders in three forms: (1) an initial cash deposit to a bank account (a "Spread Account") held by the Trust, (2) overcollateralization of the Notes, where the principal balance of the Notes issued is less than the principal balance of the contracts, and (3) in the form of subordinated Notes. The agreements governing the securitization transactions (collectively referred to as the "Securitization Agreements") require that the initial level of Credit Enhancement be supplemented by a portion of collections from the contracts until the level of Credit Enhancement reaches specified levels, which are then maintained. The specified levels are generally computed as a percentage of the principal amount remaining unpaid under the related contracts. The specified levels at which the Credit Enhancement is to be maintained will vary depending on the performance of the portfolios of contracts held by the Trusts and on other conditions. Such levels have increased and decreased from time to time based on performance of the various portfolios, and have also varied by from one Trust to another. | |||||||||
Our warehouse securitization structures are similar to the above, except that (i) the SPS that purchases the contracts pledges the contracts to secure promissory notes or loans that it issues, and (ii) no increase in the required amount of Credit Enhancement is contemplated. Upon each sale of contracts in a securitization structured as a secured financing, we retain as assets on our Consolidated Balance Sheet the securitized contracts and record as indebtedness the Notes issued in the transaction. | |||||||||
For all of the securitizations that we have completed since July 2003 (other than the September 2008 and September 2010 securitizations), we have the power to direct the most significant activities of the SPS. In addition, we have the obligation to absorb losses and the rights to receive benefits from the SPS, both of which could be potentially significant to the SPS. These types of securitization structures are treated as secured financings, in which the receivables remain on our consolidated balance sheet, and the debt issued by the SPS is shown as a securitization trust debt on our consolidated balance sheet | |||||||||
Under the September 2008 and September 2010 securitizations and other term securitizations completed prior to July 2003 (which were structured as sales for financial accounting purposes), we removed from our Consolidated Balance Sheet the contracts sold and added to our Consolidated Balance Sheet (i) the cash received, if any, and (ii) the estimated fair value of the ownership interest that we retained in contracts sold in the securitization. That retained or residual interest (the "Residual") consists of (a) the cash held in the Spread Account, if any, (b) overcollateralization, if any, (c) Notes retained, if any, and (d) receivables from the Trust, which include the net interest receivables ("NIRs"). NIRs represent the estimated discounted cash flows to be received from the Trust in the future, net of principal and interest payable with respect to the Notes, any premiums paid to the senior Note insurer (a “Note Insurer”), if any, and certain other expenses. | |||||||||
We recognize gains or losses attributable to any changes in the estimated fair value of the Residuals. Gains in fair value are recognized as Other Income and losses are recorded as an impairment loss in the Consolidated Statement of Operations. We are not aware of an active market for the purchase or sale of interests such as the Residuals; accordingly, we determine the estimated fair value of the Residuals by discounting the amount of anticipated cash flows that we estimate will be released to us in the future (the cash out method), using a discount rate that we believe is appropriate for the risks involved. The anticipated cash flows may include collections from both current and charged off receivables. We have used an effective pre-tax discount rate of 20% per annum. | |||||||||
We receive periodic base servicing fees for the servicing and collection of the contracts. In addition, we are entitled to the cash flows from the Trusts that represent collections on the contracts in excess of the amounts required to pay principal and interest on the Notes, the base servicing fees, and the premium paid to the Note Insurer, if any, and certain other fees (such as trustee and custodial fees). Required principal payments on the Notes are generally defined as the payments sufficient to keep the principal balance of the Notes equal to the aggregate principal balance of the related contracts (excluding those contracts that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related Securitization Agreements require accelerated payment of principal until the principal balance of the Notes is reduced to the specified percentage. Such accelerated principal payment is said to create "overcollateralization" of the Notes. | |||||||||
If the amount of cash required for payment of fees, interest and principal on the senior Notes exceeds the amount collected during the collection period, the shortfall is generally withdrawn from the Spread Account, if any. If the cash collected during the period exceeds the amount necessary for the above allocations plus required principal payments on the subordinated Notes, if any, and there is no shortfall in the related Spread Account or other form of Credit Enhancement, the excess is released to us. If the total Credit Enhancement amount is not at the required level, then the excess cash collected is retained in the Trust until the specified level is achieved. Cash in the Spread Accounts is restricted from our use. Cash held in the various Spread Accounts is invested in high quality, liquid investment securities, as specified in the Securitization Agreements. In determining the value of the Residuals, we have estimated the future rates of prepayments, delinquencies, defaults, default loss severity, and recovery rates, as all of these factors affect the amount and timing of the estimated cash flows. Our estimates are based on historical performance of comparable contracts. | |||||||||
Following a securitization that is structured as a sale for financial accounting purposes, we recognize interest income on the balance of the Residuals. In addition, we will recognize additional revenue in other income if the actual performance of the contracts related to the Residuals is better than our estimate of the value of the Residual. If the actual performance of the contracts is worse than our estimate, then a reduction to the carrying value of the Residuals and a related impairment charge would be required. In a securitization structured as a secured financing for financial accounting purposes, interest income is recognized when accrued under the terms of the related contracts and, therefore, presents less potential for fluctuations in performance when compared to the approach used in a transaction structured as a sale for financial accounting purposes. | |||||||||
In all of our term securitizations, whether treated as secured financings or as sales, we have transferred the receivables (through a subsidiary) to the securitization Trust. The difference between the two structures is that in securitizations that are treated as secured financings we report the assets and liabilities of the securitization Trust on our Consolidated Balance Sheet. Under both structures the Noteholders’ and the related securitization Trusts’ recourse against us for failure of the contract obligors to make payments on a timely basis is limited, in general, to our Finance receivables, Spread Accounts and Residuals. | |||||||||
Servicing | ' | ||||||||
Servicing | |||||||||
We consider the contractual servicing fee received on our managed portfolio held by non-consolidated subsidiaries to be equal to adequate compensation. Additionally, we consider that these fees would fairly compensate a substitute servicer, should one be required. As a result, no servicing asset or liability has been recognized. Servicing fees received on the managed portfolio held by non-consolidated subsidiaries are reported as income when earned. Servicing fees received on the managed portfolio held by consolidated subsidiaries are included in interest income when earned. Servicing costs are charged to expense as incurred. Servicing fees receivable, which are included in Other Assets in the accompanying Consolidated Balance Sheets, represent fees earned but not yet remitted to us by the trustee. | |||||||||
Furniture and Equipment | ' | ||||||||
Furniture and Equipment | |||||||||
Furniture and equipment are stated at cost net of accumulated depreciation. We calculate depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Assets held under capital leases and leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related lease terms. Amortization expense on assets acquired under capital lease is included with depreciation expense on owned assets. | |||||||||
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of | ' | ||||||||
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of | |||||||||
Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. | |||||||||
Other Income | ' | ||||||||
Other Income | |||||||||
The following table presents the primary components of Other Income: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Direct mail revenues | $ | 7,004 | $ | 5,949 | |||||
Convenience fees charged to obligors | 2,965 | 2,907 | |||||||
Recoveries on previously charged-off contracts | 177 | 392 | |||||||
Sales tax refunds | 197 | 227 | |||||||
Other | 62 | 114 | |||||||
$ | 10,405 | $ | 9,589 | ||||||
Earnings Per Share | ' | ||||||||
Earnings Per Share | |||||||||
The following table illustrates the computation of basic and diluted earnings per share: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands, | |||||||||
except per share data) | |||||||||
Numerator: | |||||||||
Numerator for basic and diluted earnings per share | $ | 21,005 | $ | 69,408 | |||||
Denominator: | |||||||||
Denominator for basic earnings per share - weighted average number of common shares outstanding during the year | $ | 21,538 | $ | 19,473 | |||||
Incremental common shares attributable to exercise of outstanding options and warrants | 10,036 | 6,005 | |||||||
Denominator for diluted earnings per share | $ | 31,574 | $ | 25,478 | |||||
Basic earnings per share | $ | 0.98 | $ | 3.56 | |||||
Diluted earnings per share | $ | 0.67 | $ | 2.72 | |||||
Incremental shares of 2.1 million and 979,000 related to stock options and warrants have been excluded from the diluted earnings per share calculation for the years ended December 31, 2013 and 2012, respectively, because the effect is anti-dilutive. | |||||||||
Deferral and Amortization of Debt Issuance Costs | ' | ||||||||
Deferral and Amortization of Debt Issuance Costs | |||||||||
Costs related to the issuance of debt are deferred and amortized using the interest method over the contractual or expected term of the related debt. | |||||||||
Income Taxes | ' | ||||||||
Income Taxes | |||||||||
The Company and its subsidiaries file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain states. We utilize the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the future tax consequences attributable to the differences between the financial statement values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We estimate a valuation allowance against that portion of the deferred tax asset whose utilization in future periods is not more than likely. | |||||||||
Purchases of Company Stock | ' | ||||||||
Purchases of Company Stock | |||||||||
We record purchases of our own common stock at cost and treat the shares as retired. | |||||||||
Stock Option Plan | ' | ||||||||
Stock Option Plan | |||||||||
We recognize compensation costs in the financial statements for all share-based payments granted subsequent to January 1, 2006 based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. Compensation cost is recognized over the required service period, generally defined as the vesting period. | |||||||||
Recently Issued Accounting Standards | ' | ||||||||
Recently Issued Accounting Standards | |||||||||
In July 2013, the FASB issued ASU 2013-11, which requires a reporting entity to present an unrecognized tax benefit as a liability in the financial statements separate from deferred tax assets if a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available as of the reporting date to settle taxes that would result from the disallowance of the tax position or if a reporting entity does not intend to use the deferred tax asset for such purpose. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2013. We do not expect the adoption of ASU 2013-11 to have a material impact on our consolidated financial statements. | |||||||||
Use of Estimates | ' | ||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Specifically, a number of estimates were made in connection with determining an appropriate allowance for finance credit losses, determining appropriate reserves for contingent liabilities, valuing finance receivables measured at fair value and the related debt, accreting net acquisition fees, amortizing deferred costs, and recording deferred tax assets and reserves for uncertain tax positions. These are material estimates that could be susceptible to changes in the near term and, accordingly, actual results could differ from those estimates. | |||||||||
Reclassifications | ' | ||||||||
Reclassification | |||||||||
Certain amounts for the prior year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’ equity. | |||||||||
Derivative Financial Instruments | ' | ||||||||
Derivative Financial Instruments | |||||||||
We do not use derivative financial instruments to hedge exposures to cash flow or market risks. However, from 2008 to 2010, we issued warrants to purchase our common stock in conjunction with various debt financing transactions. At the time of issuance, five of these warrants issued contained "down round," or price reset, features that are subject to classification as liabilities for financial statement purposes. These liabilities were measured at fair value, with the changes in fair value at the end of each period reflected as current period income or loss. Accordingly, changes to the market price per share of our common stock underlying these warrants with "down round" features directly affected the fair value computations for these derivative financial instruments. The effect was that any increase in the market price per share of our common stock would also increase the related liability, which in turn would result in a current period loss. Conversely, any decrease in the market price per share of our common stock would also decrease the related liability, which in turn would result in a current period gain. We used a binomial pricing model to compute the fair value of the liabilities associated with the outstanding warrants. In computing the fair value of the warrant liabilities at the end of each period, we used significant judgments with respect to the risk free interest rate, the volatility of our stock price, and the estimated life of the warrants. The warrant liabilities were included in Accounts payable and accrued expenses on our consolidated balance sheets. On March 29, 2012 we agreed with the holders to amend three of the five warrants that contained the “down round” features, removing those specific price reset terms. On the date of the amendment, we valued each of the three warrants using a binomial pricing model as described above. The aggregate value of the three amended warrants of $1.1 million was then reclassified from Accounts payable to Common stock. On June 25, 2012 we agreed with the holder to amend one other warrant that contained the “down round” features, removing those specific price reset terms. The $250,000 aggregate value of this amended warrant was reclassified from Accounts payable to Common stock on the date of the amendment. The fifth warrant with the “down round” feature was exercised on February 22, 2013. The $583,000 intrinsic value of this warrant was reclassified from Accounts payable to Common stock on the date of the exercise. As of December 31, 2013 all five of the warrants issued that previously contained price reset features have either been amended or exercised and are no longer subject to quarterly valuations. | |||||||||
Financial Covenants | ' | ||||||||
Financial Covenants | |||||||||
Certain of our securitization transactions, our residual interest financing and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2013 we were in compliance with all such financial covenants. | |||||||||
Gain on Cancellation of Debt | ' | ||||||||
Gain on Cancellation of Debt | |||||||||
In April 2013, we repurchased the outstanding Class D notes from our first 2008 securitization for a cash payment of $6.1 million and a new 5% note for $5.3 million due in June 2014. The Class D notes were held by the same related party that holds our senior secured debt. On the date we repurchased the Class D notes, the Class D note holder owned 10.5% of our outstanding common stock and warrants to purchase an additional 1.9 million shares of common stock. We subsequently exercised our “clean-up call” option and repurchased the remaining collateral from the related securitization trust. The aggregate value of our consideration for the Class D notes was $10.9 million less than our carrying value of the Class D notes at the time of the repurchase. As a result of the repurchase of the Class D notes and the termination of the securitization trust, we realized a gain of $10.9 million. | |||||||||
Provision for Contingent Liabilities | ' | ||||||||
Provision for Contingent Liabilities | |||||||||
During 2013, we recognized $7.8 million in contingent liability expenses to either record or adjust the amounts we believe we may incur related to various pending litigation. The amount was allocated in part to a long running case we refer to as the Stanwich litigation, and also to more recent matters including two California class action suits where we are the defendant, and a governmental inquiry, in which the United States Federal Trade Commission (“FTC”) has informally proposed that the we refrain from certain allegedly unfair trade practices, and make restitutionary payments into a consumer relief fund. (See Note 13) |
1_Summary_of_Significant_Accou2
1. Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Accounting Policies [Abstract] | ' | ||||||||||
Other Income | ' | ||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | ||||||||||
(In thousands) | |||||||||||
Direct mail revenues | $ | 7,004 | $ | 5,949 | |||||||
Convenience fees charged to obligors | 2,965 | 2,907 | |||||||||
Recoveries on previously charged-off contracts | 177 | 392 | |||||||||
Sales tax refunds | 197 | 227 | |||||||||
Other | 62 | 114 | |||||||||
$ | 10,405 | $ | 9,589 | ||||||||
Stock option activity | ' | ||||||||||
Weighted | |||||||||||
Number of | Weighted | Average | |||||||||
Shares | Average | Remaining | |||||||||
(in thousands) | Exercise Price | Contractual Term | |||||||||
Options outstanding at the beginning of period | 8,652 | $ | 1.58 | N/A | |||||||
Granted | 3,040 | 7.43 | N/A | ||||||||
Exercised | (1,413 | ) | 1.5 | N/A | |||||||
Forfeited/Expired | (151 | ) | 4.64 | N/A | |||||||
Options outstanding at the end of period | 10,128 | $ | 3.3 | 6.40 years | |||||||
Options exercisable at the end of period | 5,777 | $ | 2.17 | 4.96 years | |||||||
Earnings Per Share | ' | ||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | ||||||||||
(In thousands, | |||||||||||
except per share data) | |||||||||||
Numerator: | |||||||||||
Numerator for basic and diluted earnings per share | $ | 21,005 | $ | 69,408 | |||||||
Denominator: | |||||||||||
Denominator for basic earnings per share - weighted average number of common shares outstanding during the year | $ | 21,538 | $ | 19,473 | |||||||
Incremental common shares attributable to exercise of outstanding options and warrants | 10,036 | 6,005 | |||||||||
Denominator for diluted earnings per share | $ | 31,574 | $ | 25,478 | |||||||
Basic earnings per share | $ | 0.98 | $ | 3.56 | |||||||
Diluted earnings per share | $ | 0.67 | $ | 2.72 | |||||||
3_Finance_Receivables_Tables
3. Finance Receivables (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Finance Receivables Tables | ' | ||||||||
Financial Receivables | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Finance receivables | (In thousands) | ||||||||
Automobile finance receivables, net of unearned interest | $ | 1,182,950 | $ | 795,786 | |||||
Less: Unearned acquisition fees and discounts | (27,887 | ) | (31,443 | ) | |||||
Finance receivables | $ | 1,155,063 | $ | 764,343 | |||||
Delinquency status of finance receivables | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Delinquency Status | |||||||||
Current | $ | 1,125,926 | $ | 764,741 | |||||
31 - 60 days | 21,421 | 16,925 | |||||||
61 - 90 days | 4,663 | 9,019 | |||||||
91 + days | 10,940 | 5,101 | |||||||
$ | 1,182,950 | $ | 795,786 | ||||||
Allowance for credit losses | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Balance at beginning of year | $ | 19,594 | $ | 10,351 | |||||
Provision for credit losses | 76,869 | 33,495 | |||||||
Charge-offs | (69,455 | ) | (37,638 | ) | |||||
Recoveries | 12,618 | 13,386 | |||||||
Balance at end of year | $ | 39,626 | $ | 19,594 | |||||
Allowance for losses on repossessed inventory | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Gross balance of repossessions in inventory | $ | 24,743 | $ | 12,102 | |||||
Allowance for losses on repossessed inventory | (14,779 | ) | (6,384 | ) | |||||
Net repossessed inventory included in other assets | $ | 9,964 | $ | 5,718 | |||||
4_Finance_Receivables_Measured1
4. Finance Receivables Measured at Fair Value (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Finance Receivables Measured At Fair Value Tables | ' | ||||||||
Finance Receivables measured at fair value | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Finance receivables measured at fair value | (In thousands) | ||||||||
Finance receivables and accrued interest, net of unearned interest | $ | 14,786 | $ | 60,804 | |||||
Less: Fair value adjustment | (310 | ) | (1,136 | ) | |||||
Finance receivables measured at fair value | $ | 14,476 | $ | 59,668 | |||||
Delinquency status of finance receivables measured at fair value | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Delinquency Status | |||||||||
Current | $ | 13,421 | $ | 57,556 | |||||
31 - 60 days | 878 | 2,206 | |||||||
61 - 90 days | 253 | 710 | |||||||
91 + days | 234 | 332 | |||||||
$ | 14,786 | $ | 60,804 |
6_Furniture_and_Equipment_Tabl
6. Furniture and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Furniture And Equipment Tables | ' | ||||||||
Furniture and equipment | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Furniture and fixtures | $ | 1,141 | $ | 1,139 | |||||
Computer and telephone equipment | 4,094 | 3,619 | |||||||
Leasehold improvements | 633 | 633 | |||||||
5,868 | 5,391 | ||||||||
Less: accumulated depreciation and amortization | (5,102 | ) | (4,665 | ) | |||||
$ | 766 | $ | 726 | ||||||
7_Securitization_Trust_Debt_Ta
7. Securitization Trust Debt (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||
Securitization Trust Debt Tables | ' | ||||||||||||||||||||||
Securitization trust debt | ' | ||||||||||||||||||||||
Final Scheduled | Receivables Pledged at | Outstanding Principal at | Outstanding Principal at | Weighted Average Interest Rate at | |||||||||||||||||||
Payment | December 31, | Initial | December 31, | December 31, | December 31, | ||||||||||||||||||
Series | Date (1) | 2013 (2) | Principal | 2013 | 2012 | 2013 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
CPS 2008-A | Oct-14 | $ | – | $ | 310,359 | $ | – | $ | 40,713 | – | |||||||||||||
Page Five Funding | Jan-18 | 11,038 | 46,058 | 9,358 | 21,251 | 9.37% | |||||||||||||||||
CPS 2011-A | Apr-18 | 28,278 | 100,364 | 24,526 | 48,368 | 3.42% | |||||||||||||||||
CPS 2011-B | Sep-18 | 44,704 | 109,936 | 44,433 | 70,863 | 4.67% | |||||||||||||||||
CPS 2011-C | Mar-19 | 56,232 | 119,400 | 56,271 | 88,269 | 5.01% | |||||||||||||||||
CPS 2012-A | Jun-19 | 65,557 | 155,000 | 65,051 | 105,485 | 3.56% | |||||||||||||||||
CPS 2012-B | Sep-19 | 86,555 | 141,500 | 86,254 | 122,329 | 3.24% | |||||||||||||||||
CPS 2012-C | Dec-19 | 93,098 | 147,000 | 93,006 | 135,219 | 2.59% | |||||||||||||||||
CPS 2012-D | Mar-20 | 111,633 | 160,000 | 108,815 | 160,000 | 2.17% | |||||||||||||||||
CPS 2013-A | Jun-20 | 152,575 | 185,000 | 142,842 | – | 1.90% | |||||||||||||||||
CPS 2013-B | Sep-20 | 179,952 | 205,000 | 172,499 | – | 2.32% | |||||||||||||||||
CPS 2013-C | Dec-20 | 194,810 | 205,000 | 191,504 | – | 2.41% | |||||||||||||||||
CPS 2013-D (3) | Mar-21 | 117,804 | 183,000 | 183,000 | – | 2.19% | |||||||||||||||||
$ | 1,142,236 | $ | 2,067,617 | $ | 1,177,559 | $ | 792,497 | ||||||||||||||||
_________________________ | |||||||||||||||||||||||
-1 | The Final Scheduled Payment Date represents final legal maturity of the securitization trust debt. Securitization trust debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the Trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $445.7 million in 2014, $345.1 million in 2015, $216.6 million in 2016, $117.0 million in 2017, $40.3 million in 2018, and $12.9 million in 2019. | ||||||||||||||||||||||
-2 | Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheet. | ||||||||||||||||||||||
-3 | An additional $63.4 million of receivables were pledged to CPS 2013-D in January 2014. | ||||||||||||||||||||||
8_Debt_Tables
8. Debt (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||
Debt Outstanding | ' | ||||||||||||||||
Amount Outstanding at | |||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Description | Interest Rate | Maturity | |||||||||||||||
Warehouse lines of credit | 5.73% over one month Libor (Minimum 6.73%) | Mar-17 | $ | 9,452 | $ | 4,358 | |||||||||||
6.00% over one month Libor (Minimum 6.75%) | Jun-16 | – | 17,373 | ||||||||||||||
Residual interest financing | 12.875% over one month Libor | Sep-13 | – | 13,773 | |||||||||||||
11.75% over one month Libor | Apr-18 | 19,096 | – | ||||||||||||||
Debt secured by receivables measured at fair value | n/a | Repayment is based on payments from underlying receivables. Final payment of the 8.00% loan was made in September 2013, with residual payments extending through 2016 | 13,117 | 57,107 | |||||||||||||
Senior secured debt, related party | 13.0% and 16.0% at December 31, 2013 and 2012, respectively | Jun-14 | 37,128 | 50,135 | |||||||||||||
5.00% | Jun-14 | 1,431 | – | ||||||||||||||
Subordinated renewable notes | Weighted average rate of 12.5% and 14.4% at December 31, 2013 and 2012, respectively | Weighted average maturity of July 2015 and June 2015 at December 31, 2013 and 2012, respectively | 19,142 | 23,281 | |||||||||||||
$ | 99,366 | $ | 166,027 | ||||||||||||||
Contractual and expected maturity amounts of debt | ' | ||||||||||||||||
Contractual maturity date | Residual | Senior | Subordinated | Total | |||||||||||||
interest | secured | renewable | |||||||||||||||
financing (1) | debt (2) | notes | |||||||||||||||
(In thousands) | |||||||||||||||||
2014 | $ | 6,333 | $ | 38,559 | $ | 11,400 | $ | 56,292 | |||||||||
2015 | 3,202 | – | 2,480 | 5,682 | |||||||||||||
2016 | 1,159 | – | 3,267 | 4,426 | |||||||||||||
2017 | 4,300 | – | 212 | 4,512 | |||||||||||||
2018 | 4,102 | – | 565 | 4,667 | |||||||||||||
Thereafter | – | – | 1,218 | 1,218 | |||||||||||||
Total | $ | 19,096 | $ | 38,559 | $ | 19,142 | $ | 76,797 |
9_Shareholders_Equity_Tables
9. Shareholders' Equity (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Shareholders Equity Tables | ' | ||||||||||
Options and Warrants assumptions used | ' | ||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | ||||||||||
Expected life (years) | 5.41 | 5.63 | |||||||||
Risk-free interest rate | 0.73% | 1.32% | |||||||||
Volatility | 80% | 79% | |||||||||
Expected dividend yield | – | – | |||||||||
Stock option activity | ' | ||||||||||
Weighted | |||||||||||
Number of | Weighted | Average | |||||||||
Shares | Average | Remaining | |||||||||
(in thousands) | Exercise Price | Contractual Term | |||||||||
Options outstanding at the beginning of period | 8,652 | $ | 1.58 | N/A | |||||||
Granted | 3,040 | 7.43 | N/A | ||||||||
Exercised | (1,413 | ) | 1.5 | N/A | |||||||
Forfeited/Expired | (151 | ) | 4.64 | N/A | |||||||
Options outstanding at the end of period | 10,128 | $ | 3.3 | 6.40 years | |||||||
Options exercisable at the end of period | 5,777 | $ | 2.17 | 4.96 years | |||||||
10_Interest_Income_Tables
10. Interest Income (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Interest Income | ' | ||||||||
Interest income | ' | ||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Interest on finance receivables | $ | 231,320 | $ | 174,019 | |||||
Residual interest income | – | 458 | |||||||
Other interest income | 10 | 837 | |||||||
Interest income | $ | 231,330 | $ | 175,314 | |||||
11_Income_Taxes_Tables
11. Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Income taxes | ' | ||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Current federal tax expense | $ | 977 | $ | 369 | |||||
Current state tax expense | 365 | 49 | |||||||
Deferred federal tax expense | 13,306 | 2,826 | |||||||
Deferred state tax expense (benefit) | 1,520 | (654 | ) | ||||||
Change in valuation allowance | – | (62,811 | ) | ||||||
Income tax expense (benefit) | $ | 16,168 | $ | (60,221 | ) | ||||
Income tax expense/(benefit) | ' | ||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Expense at federal tax rate | $ | 13,011 | $ | 3,215 | |||||
State taxes, net of federal income tax effect | 2,079 | 1,190 | |||||||
Other adjustments to tax reserve | (419 | ) | (1,153 | ) | |||||
Effect of change in state tax rate | (239 | ) | (1,105 | ) | |||||
Change in valuation allowance | – | (62,811 | ) | ||||||
Stock-based compensation | 911 | 321 | |||||||
Non-deductible expenses | 619 | 63 | |||||||
Other | 206 | 59 | |||||||
$ | 16,168 | $ | (60,221 | ) | |||||
Deferred tax assets and liabilities | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Deferred Tax Assets: | |||||||||
Finance receivables | $ | 17,258 | $ | 10,840 | |||||
Accrued liabilities | 5,079 | 1,605 | |||||||
Furniture and equipment | 196 | 213 | |||||||
NOL carryforwards | 23,811 | 48,140 | |||||||
Built in losses | 13,074 | 14,406 | |||||||
Pension accrual | – | 2,080 | |||||||
AMT credit carryforward | 1,993 | 695 | |||||||
Other | 839 | 712 | |||||||
Total deferred tax assets | 62,250 | 78,691 | |||||||
Deferred Tax Liabilities: | |||||||||
FAS 91 deferred costs | (1,555 | ) | (1,114 | ) | |||||
Pension accrual | (1,136 | ) | – | ||||||
Investment residual | (344 | ) | (1,937 | ) | |||||
Total deferred tax liabilities | (3,035 | ) | (3,051 | ) | |||||
Net deferred tax asset | $ | 59,215 | $ | 75,640 | |||||
Unrecognized tax benefits including interest and penalties | ' | ||||||||
2013 | 2012 | ||||||||
(In thousands) | |||||||||
Unrecognized tax benefit - opening balance | $ | 1,331 | $ | 2,405 | |||||
Gross increases - tax positions in prior period | – | – | |||||||
Gross decreases - tax positions in current period | – | – | |||||||
Gross increases - tax positions in current period | – | 250 | |||||||
Settlements | (686 | ) | (153 | ) | |||||
Lapse of statute of limitations | (645 | ) | (1,171 | ) | |||||
Unrecognized tax benefit - ending balance | $ | – | $ | 1,331 | |||||
13_Commitments_and_Contingenci1
13. Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments And Contingencies Tables | ' | ||||
Leases | ' | ||||
Amount | |||||
(In thousands) | |||||
2014 | $ | 3,249 | |||
2015 | 3,339 | ||||
2016 | 2,898 | ||||
2017 | 1,580 | ||||
2018 | 1,228 | ||||
Thereafter | 810 | ||||
Total minimum lease payments | $ | 13,104 | |||
14_Employee_Benefits_Tables
14. Employee Benefits (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Employee Benefits | ' | ||||||||||||||||
Reconciliation of the change in the plan's benefit obligations | ' | ||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Change in Projected Benefit Obligation | |||||||||||||||||
Projected benefit obligation, beginning of year | $ | 21,792 | $ | 19,443 | |||||||||||||
Service cost | – | – | |||||||||||||||
Interest cost | 823 | 875 | |||||||||||||||
Assumption changes | (2,420 | ) | 2,332 | ||||||||||||||
Actuarial (gain) loss | (113 | ) | 2 | ||||||||||||||
Settlements | – | – | |||||||||||||||
Benefits paid | (1,241 | ) | (860 | ) | |||||||||||||
Projected benefit obligation, end of year | $ | 18,841 | $ | 21,792 | |||||||||||||
Change in Plan Assets | |||||||||||||||||
Fair value of plan assets, beginning of year | $ | 16,612 | $ | 10,613 | |||||||||||||
Return on assets | 6,009 | 5,439 | |||||||||||||||
Employer contribution | 389 | 1,473 | |||||||||||||||
Expenses | (105 | ) | (53 | ) | |||||||||||||
Settlements | – | – | |||||||||||||||
Benefits paid | (1,241 | ) | (860 | ) | |||||||||||||
Fair value of plan assets, end of year | $ | 21,664 | $ | 16,612 | |||||||||||||
Funded Status at end of year | $ | 2,823 | $ | (5,180 | ) | ||||||||||||
Weighted average assumptions used to determine pension benefit obligations | ' | ||||||||||||||||
December, 31 | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted average assumptions used to determine benefit obligations | |||||||||||||||||
Discount rate | 4.75% | 3.91% | |||||||||||||||
Weighted average assumptions used to determine net periodic benefit cost | |||||||||||||||||
Discount rate | 3.91% | 4.60% | |||||||||||||||
Expected return on plan assets | 8.25% | 8.50% | |||||||||||||||
Schedule of accumulated pension benefit obligation | ' | ||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Amounts recognized on Consolidated Balance Sheet | |||||||||||||||||
Other assets | $ | 2,823 | $ | – | |||||||||||||
Other liabilities | – | (5,180 | ) | ||||||||||||||
Net amount recognized | $ | 2,823 | $ | (5,180 | ) | ||||||||||||
Amounts recognized in accumulated other comprehensive income consists of: | |||||||||||||||||
Net gain | $ | 1,367 | $ | 8,953 | |||||||||||||
Unrecognized transition asset | – | – | |||||||||||||||
Net amount recognized | $ | 1,367 | $ | 8,953 | |||||||||||||
Components of net periodic benefit cost | |||||||||||||||||
Interest cost | $ | 823 | $ | 875 | |||||||||||||
Expected return on assets | (1,335 | ) | (928 | ) | |||||||||||||
Amortization of transition asset | – | – | |||||||||||||||
Amortization of net loss | 484 | 680 | |||||||||||||||
Net periodic benefit cost | (28 | ) | 627 | ||||||||||||||
Settlement (gain)/loss | – | – | |||||||||||||||
Total | $ | (28 | ) | $ | 627 | ||||||||||||
Benefit Obligation Recognized in Other Comprehensive Income | |||||||||||||||||
Net gain | $ | (7,586 | ) | $ | (2,748 | ) | |||||||||||
Prior service cost (credit) | – | – | |||||||||||||||
Amortization of prior service cost | – | – | |||||||||||||||
Net amount recognized in other comprehensive income | $ | (7,586 | ) | $ | (2,748 | ) | |||||||||||
Accumulated Pension Benefit Obligation | $ | (1,095 | ) | $ | (5,637 | ) | |||||||||||
Weighted average asset allocation of our pension benefits | ' | ||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted Average Asset Allocation at Year-End | |||||||||||||||||
Asset Category | |||||||||||||||||
Equity securities | 87% | 83% | |||||||||||||||
Debt securities | 13% | 16% | |||||||||||||||
Cash and cash equivalents | 0% | 1% | |||||||||||||||
Total | 100% | 100% | |||||||||||||||
Estimated Future Benefit Payments | ' | ||||||||||||||||
Cash Flows | |||||||||||||||||
Estimated Future Benefit Payments (In thousands) | |||||||||||||||||
2014 | $ | 722 | |||||||||||||||
2015 | 816 | ||||||||||||||||
2016 | 828 | ||||||||||||||||
2017 | 862 | ||||||||||||||||
2018 | 894 | ||||||||||||||||
Years 2019 - 2023 | 5,075 | ||||||||||||||||
Anticipated Contributions in 2014 | $ | 562 | |||||||||||||||
Fair value of plan assets | ' | ||||||||||||||||
31-Dec-13 | |||||||||||||||||
Level 1 (1) | Level 2 (2) | Level 3 (3) | Total | ||||||||||||||
Investment Name: | (in thousands) | ||||||||||||||||
Company Common Stock | $ | 8,319 | $ | – | $ | – | $ | 8,319 | |||||||||
Fundamental Value | – | 2,384 | – | 2,384 | |||||||||||||
Mid Cap Growth | – | 709 | – | 709 | |||||||||||||
Focus Value | – | 692 | – | 692 | |||||||||||||
Small Co. Value | – | 693 | – | 693 | |||||||||||||
Growth | – | 3,237 | – | 3,237 | |||||||||||||
International Growth | – | 2,855 | – | 2,855 | |||||||||||||
Core Bond | – | 1,870 | – | 1,870 | |||||||||||||
High Yield | – | 387 | – | 387 | |||||||||||||
Inflation Protected Bond | – | 487 | – | 487 | |||||||||||||
Money Market | – | 31 | – | 31 | |||||||||||||
Total | $ | 8,319 | $ | 13,345 | $ | – | $ | 21,664 | |||||||||
31-Dec-12 | |||||||||||||||||
Level 1 (1) | Level 2 (2) | Level 3 (3) | Total | ||||||||||||||
Investment Name: | (in thousands) | ||||||||||||||||
Company Common Stock | $ | 4,791 | $ | – | $ | – | $ | 4,791 | |||||||||
Fundamental Value | – | 2,049 | – | 2,049 | |||||||||||||
Mid Cap Growth | – | 596 | – | 596 | |||||||||||||
Focus Value | – | 607 | – | 607 | |||||||||||||
Small Co. Value | – | 604 | – | 604 | |||||||||||||
Growth | – | 2,681 | – | 2,681 | |||||||||||||
International Growth | – | 2,431 | – | 2,431 | |||||||||||||
Core Bond | – | 1,780 | – | 1,780 | |||||||||||||
Income | – | 363 | – | 363 | |||||||||||||
Inflation Protected Bond | – | 472 | – | 472 | |||||||||||||
Money Market | – | 238 | – | 238 | |||||||||||||
Total | $ | 4,791 | $ | 11,821 | $ | – | $ | 16,612 | |||||||||
________________________ | |||||||||||||||||
-1 | Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. | ||||||||||||||||
-2 | All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. | ||||||||||||||||
-3 | There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs. | ||||||||||||||||
15_Fair_Value_Measurements_Tab
15. Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Fair Value Measurements Tables | ' | ||||||||||||||||||||
Reconciliation of the acquired finance receivables and related debt measured at fair value on a recurring basis | ' | ||||||||||||||||||||
December 31, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Finance Receivables Measured at Fair Value: | |||||||||||||||||||||
Balance at beginning of year | $ | 59,668 | $ | 160,253 | |||||||||||||||||
Payments on finance receivables at fair value | (43,122 | ) | (104,682 | ) | |||||||||||||||||
Charge-offs on finance receivables at fair value | (2,896 | ) | (6,681 | ) | |||||||||||||||||
Discount accretion | 1,421 | 4,144 | |||||||||||||||||||
Mark to fair value | (595 | ) | 6,634 | ||||||||||||||||||
Balance at end of year | $ | 14,476 | $ | 59,668 | |||||||||||||||||
Debt Secured by Finance Receivables Measured at Fair Value: | |||||||||||||||||||||
Balance at beginning of year | $ | 57,107 | $ | 166,828 | |||||||||||||||||
Principal payments on debt at fair value | (45,969 | ) | (121,413 | ) | |||||||||||||||||
Premium accretion | 2,726 | 4,579 | |||||||||||||||||||
Mark to fair value | (747 | ) | 7,113 | ||||||||||||||||||
Balance at end of year | 13,117 | 57,107 | |||||||||||||||||||
Reduction for payments collected and payable | (1,654 | ) | (5,548 | ) | |||||||||||||||||
Adjusted balance at end of year | $ | 11,463 | $ | 51,559 | |||||||||||||||||
Comparision of fair values of the Fireside receivables and the related secured debt | ' | ||||||||||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||||||||||
Contractual | Fair | Contractual | Fair | ||||||||||||||||||
Balance | Value | Balance | Value | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Fireside receivables portfolio | $ | 14,786 | $ | 14,476 | $ | 60,804 | $ | 59,668 | |||||||||||||
Debt secured by Fireside receivables portfolio | – | 13,117 | 41,365 | 57,107 | |||||||||||||||||
Reconciliation for level 3 assets | ' | ||||||||||||||||||||
December 31, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Residual Interest in Securitizations: | |||||||||||||||||||||
Balance at beginning of year | $ | 4,824 | $ | 4,414 | |||||||||||||||||
Cash received during year | (3,970 | ) | (48 | ) | |||||||||||||||||
Included in earnings | – | 458 | |||||||||||||||||||
Balance at end of year | $ | 854 | $ | 4,824 | |||||||||||||||||
Warrant Derivative Liability: | |||||||||||||||||||||
Balance at beginning of year | $ | 355 | $ | 967 | |||||||||||||||||
Included in earnings | 228 | 695 | |||||||||||||||||||
Reclassification to equity | (583 | ) | (1,307 | ) | |||||||||||||||||
Balance at end of year | $ | – | $ | 355 | |||||||||||||||||
Qualitative information about level 3 fair value measurements | ' | ||||||||||||||||||||
Financial Instrument | Fair Values as of | Inputs as of | |||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2013 | 2012 | Valuation Techniques | Unobservable Inputs | 2013 | 2012 | ||||||||||||||||
(In thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Finance receivables measured at fair value | Discount rate | 15.40% | 20.40% | ||||||||||||||||||
$ | 14,476 | $ | 59,668 | Discounted cash flows | Cumulative net losses | 5.00% | 5.50% | ||||||||||||||
Monthly average prepayments | 0.50% | 0.50% | |||||||||||||||||||
Residual interest in securitizations | Discount rate | 20.00% | 20.00% | ||||||||||||||||||
854 | 4,824 | Discounted cash flows | Cumulative net losses | 15.00% | 13.70% | ||||||||||||||||
Monthly average prepayments | 0.50% | 0.50% | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Stock price | n/a | $5.36/sh | |||||||||||||||||||
Warrant derivative liability | $ | – | $ | 355 | Binomial | Volatility | n/a | 40.00% | |||||||||||||
Risk free rate | n/a | 1.26% | |||||||||||||||||||
Debt secured by receivables measured at fair value | $ | 13,117 | 57,107 | Discounted cash flows | Discount rate | 12.20% | 16.20% | ||||||||||||||
Estimated fair values of financial assets and liabilities | ' | ||||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||
Financial Instrument | (In thousands) | ||||||||||||||||||||
Carrying | Fair Value Measurements Using: | ||||||||||||||||||||
Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 22,112 | $ | 22,112 | $ | – | $ | – | $ | 22,112 | |||||||||||
Restricted cash and equivalents | 132,284 | 132,284 | – | – | 132,284 | ||||||||||||||||
Finance receivables, net | 1,115,437 | – | – | 1,100,153 | 1,100,153 | ||||||||||||||||
Finance receivables measured at fair value | 14,476 | – | – | 14,476 | 14,476 | ||||||||||||||||
Residual interest in securitizations | 854 | – | – | 854 | 854 | ||||||||||||||||
Accrued interest receivable | 18,670 | – | – | 18,670 | 18,670 | ||||||||||||||||
Liabilities: | |||||||||||||||||||||
Warehouse lines of credit | $ | 9,452 | $ | – | $ | – | $ | 9,452 | $ | 9,452 | |||||||||||
Accrued interest payable | 2,908 | – | – | 2,908 | 2,908 | ||||||||||||||||
Residual interest financing | 19,096 | – | – | 19,096 | 19,096 | ||||||||||||||||
Debt secured by receivables measured at fair value | 13,117 | – | – | 13,117 | 13,117 | ||||||||||||||||
Securitization trust debt | 1,177,559 | – | – | 1,189,086 | 1,189,086 | ||||||||||||||||
Senior secured debt | 38,559 | – | – | 38,559 | 38,559 | ||||||||||||||||
Subordinated renewable notes | 19,142 | – | – | 19,142 | 19,142 | ||||||||||||||||
As of December 31, 2012 | |||||||||||||||||||||
Financial Instrument | (In thousands) | ||||||||||||||||||||
Carrying | Fair Value Measurements Using: | ||||||||||||||||||||
Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 12,966 | $ | 12,966 | $ | – | $ | – | $ | 12,966 | |||||||||||
Restricted cash and equivalents | 104,445 | 104,445 | – | – | 104,445 | ||||||||||||||||
Finance receivables, net | 744,749 | – | – | 740,511 | 740,511 | ||||||||||||||||
Finance receivables measured at fair value | 59,668 | – | – | 59,668 | 59,668 | ||||||||||||||||
Residual interest in securitizations | 4,824 | – | – | 4,824 | 4,824 | ||||||||||||||||
Accrued interest receivable | 10,411 | – | – | 10,411 | 10,411 | ||||||||||||||||
Liabilities: | |||||||||||||||||||||
Warrant derivative liability | $ | 355 | $ | – | $ | – | $ | 355 | $ | 355 | |||||||||||
Warehouse lines of credit | 21,731 | – | – | 21,731 | 21,731 | ||||||||||||||||
Accrued interest payable | 2,795 | – | – | 2,795 | 2,795 | ||||||||||||||||
Residual interest financing | 13,773 | – | – | 13,773 | 13,773 | ||||||||||||||||
Debt secured by receivables measured at fair value | 57,107 | – | – | 57,107 | 57,107 | ||||||||||||||||
Securitization trust debt | 792,497 | – | – | 803,290 | 803,290 | ||||||||||||||||
Senior secured debt | 50,135 | – | – | 50,135 | 50,135 | ||||||||||||||||
Subordinated renewable notes | 23,281 | – | – | 23,281 | 23,281 | ||||||||||||||||
1_Summary_of_Significant_Accou3
1. Summary of Significant Accounting Policies - Schedule of Other Income (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Primary components of Other Income | ' | ' |
Other income for the period | $10,405 | $9,589 |
Direct Mail Revenues | ' | ' |
Primary components of Other Income | ' | ' |
Other income for the period | 7,004 | 5,949 |
Convenience Fee Revenue | ' | ' |
Primary components of Other Income | ' | ' |
Other income for the period | 2,965 | 2,907 |
Recoveries on previously charged-off contracts | ' | ' |
Primary components of Other Income | ' | ' |
Other income for the period | 177 | 392 |
Sales Tax Refunds | ' | ' |
Primary components of Other Income | ' | ' |
Other income for the period | 197 | 227 |
Other Income | ' | ' |
Primary components of Other Income | ' | ' |
Other income for the period | $62 | $114 |
1_Summary_of_Significant_Accou4
1. Summary of Significant Accounting Policies - Earnings per share (Details) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Summary Of Significant Accounting Policies - Earnings Per Share Details | ' | ' |
Numerator for basic and diluted earnings per share | $21,005 | $69,408 |
Denominator for basic earnings per share - weighted average number of common shares outstanding during the year | 21,538 | 19,473 |
Incremental common shares attibutable to exercise of outstanding options and warrants | 10,036 | 6,005 |
Denominator for diluted earnings per share | 31,574 | 25,478 |
Basic earnings per share | $0.98 | $3.56 |
Diluted earnings per share | $0.67 | $2.72 |
3_Finance_Receivables_Details
3. Finance Receivables (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Finance Receivables Details | ' | ' |
Automobile finance receivables, net of unearned interest | $1,182,950 | $795,786 |
Less: Unearned acquisition fees and discounts | -27,887 | -31,443 |
Finance Receivables | $1,155,063 | $764,343 |
3_Delinquency_Status_Finance_R
3. Delinquency Status Finance Receivables (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Deliquency Status | ' | ' |
Current | $1,125,926 | $764,741 |
31 - 60 days | 21,421 | 16,925 |
61 - 90 days | 4,663 | 9,019 |
91 + days | 10,940 | 5,101 |
Finance receivables | $1,182,950 | $795,786 |
3_Allowance_for_Finance_Credit
3. Allowance for Finance Credit Losses (Detail) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Finance Receivables Details | ' | ' |
Balance at beginning of period | $19,594 | $10,351 |
Provision for credit losses | 76,869 | 33,495 |
Charge-offs | -69,455 | -37,638 |
Recoveries | 12,618 | 13,386 |
Balance at end of period | $39,626 | $19,594 |
3_Repossessed_Inventory_Detail
3. Repossessed Inventory (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Finance Receivables Details | ' | ' |
Gross balance of repossessions in inventory | $24,743 | $12,102 |
Allowance for losses on repossessed inventory | -14,779 | -6,384 |
Net repossessed inventory included in other assets | $9,964 | $5,718 |
3_Finance_Receivables_Details_
3. Finance Receivables (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Finance Receivables Details Narrative | ' | ' |
Finance receivables | $10,900 | $5,100 |
4_Finance_Receivables_Measured2
4. Finance Receivables Measured at Fair Value (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Finance Receivables Measured At Fair Value Tables | ' | ' |
Finance receivables and accrued interest, net of unearned interest | $14,786 | $60,804 |
Less: Fair value adjustment | -310 | -1,136 |
Finance receivables measured at fair value | $14,476 | $59,668 |
4_Fair_Value_of_Delinquency_St
4. Fair Value of Delinquency Status of Finance Receivables (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Deliquency Status | ' | ' |
Total finance receivables measured at fair value | $14,786 | $60,804 |
Current | ' | ' |
Deliquency Status | ' | ' |
Total finance receivables measured at fair value | 13,421 | 57,557 |
31-60 days | ' | ' |
Deliquency Status | ' | ' |
Total finance receivables measured at fair value | 878 | 2,206 |
61-90 days | ' | ' |
Deliquency Status | ' | ' |
Total finance receivables measured at fair value | 253 | 710 |
91 + days | ' | ' |
Deliquency Status | ' | ' |
Total finance receivables measured at fair value | $234 | $332 |
6_Furniture_and_Equipment_Deta
6. Furniture and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Components of furniture and equipment: | ' | ' |
Furniture and fixtures | $1,141 | $1,139 |
Computer and telephone equipment | 4,094 | 3,619 |
Leasehold improvements | 633 | 633 |
Furniture and equipment, Total | 5,868 | 5,391 |
Less: accumulated depreciation and amortization | -5,102 | -4,665 |
Furniture and equipment, net | $766 | $726 |
6_Furniture_and_Equipment_Deta1
6. Furniture and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Abstract] | ' | ' |
Depreciation expense | $437 | $543 |
7_Securitization_Trust_Debt_De
7. Securitization Trust Debt (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Receivables Pledged at end of period | $1,142,236 | ' |
Initial Principal | 2,067,617 | ' |
Outstanding Principal | 1,177,559 | 792,497 |
CPS 2008-A [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Oct-14 | ' |
Receivables Pledged at end of period | 0 | ' |
Initial Principal | 310,359 | ' |
Outstanding Principal | 0 | 40,713 |
Page Five Funding [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Jan-18 | ' |
Receivables Pledged at end of period | 11,038 | ' |
Initial Principal | 46,058 | ' |
Outstanding Principal | 9,358 | 21,251 |
Weighted Average Contractual Interest Rate | 9.37% | ' |
CPS 2011-A [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Apr-18 | ' |
Receivables Pledged at end of period | 28,278 | ' |
Initial Principal | 100,364 | ' |
Outstanding Principal | 24,526 | 48,368 |
Weighted Average Contractual Interest Rate | 3.42% | ' |
CPS 2011-B [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Sep-18 | ' |
Receivables Pledged at end of period | 44,704 | ' |
Initial Principal | 109,936 | ' |
Outstanding Principal | 44,433 | 70,863 |
Weighted Average Contractual Interest Rate | 4.67% | ' |
CPS 2011-C [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Mar-19 | ' |
Receivables Pledged at end of period | 56,232 | ' |
Initial Principal | 119,400 | ' |
Outstanding Principal | 56,271 | 88,269 |
Weighted Average Contractual Interest Rate | 5.01% | ' |
CPS 2012-A [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Jun-19 | ' |
Receivables Pledged at end of period | 65,557 | ' |
Initial Principal | 155,000 | ' |
Outstanding Principal | 65,051 | 105,485 |
Weighted Average Contractual Interest Rate | 3.56% | ' |
CPS 2012-B [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Sep-19 | ' |
Receivables Pledged at end of period | 86,555 | ' |
Initial Principal | 141,500 | ' |
Outstanding Principal | 86,254 | 122,329 |
Weighted Average Contractual Interest Rate | 3.24% | ' |
CPS 2012-C [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Dec-19 | ' |
Receivables Pledged at end of period | 93,098 | ' |
Initial Principal | 147,000 | ' |
Outstanding Principal | 93,006 | 135,219 |
Weighted Average Contractual Interest Rate | 2.59% | ' |
CPS 2012-D [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Mar-20 | ' |
Receivables Pledged at end of period | 111,633 | ' |
Initial Principal | 160,000 | ' |
Outstanding Principal | 108,815 | 160,000 |
Weighted Average Contractual Interest Rate | 2.17% | ' |
CPS 2013-A [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Jun-20 | ' |
Receivables Pledged at end of period | 152,575 | ' |
Initial Principal | 185,000 | ' |
Outstanding Principal | 142,842 | 0 |
Weighted Average Contractual Interest Rate | 1.90% | ' |
CPS 2013-B [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Sep-20 | ' |
Receivables Pledged at end of period | 179,952 | ' |
Initial Principal | 205,000 | ' |
Outstanding Principal | 172,499 | 0 |
Weighted Average Contractual Interest Rate | 2.32% | ' |
CPS 2013-C [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Dec-20 | ' |
Receivables Pledged at end of period | 194,810 | ' |
Initial Principal | 205,000 | ' |
Outstanding Principal | 191,504 | 0 |
Weighted Average Contractual Interest Rate | 2.41% | ' |
CPS 2013-D [Member] | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Final Scheduled Payment Date | 'Mar-21 | ' |
Receivables Pledged at end of period | 117,804 | ' |
Initial Principal | 183,000 | ' |
Outstanding Principal | $183,000 | $0 |
Weighted Average Contractual Interest Rate | 2.19% | ' |
7_Securitization_Trust_Debt_De1
7. Securitization Trust Debt (Details Narrative) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Securitization Trust Debt Tables | ' |
Restricted Cash for securitization trust debt | $132,300 |
8_Debt_DetailsDebt_Outstanding
8. Debt (Details-Debt Outstanding) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | $99,366 | $166,027 |
Warehouse lines of credit 1 | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 9,452 | 4,358 |
Interest rate | '5.73% over one month Libor (Minimum 6.73%) | ' |
Maturity date | 'Mar-17 | ' |
Warehouse lines of credit 2 | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 0 | 17,373 |
Interest rate | '6.00% over one month Libor (Minimum 6.75%) | ' |
Maturity date | 'Jun-16 | ' |
Residual interest financing | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 0 | 13,773 |
Interest rate | '12.875% over one month Libor | ' |
Maturity date | 'Sep-13 | ' |
Residual interest financing 2 | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 19,096 | 0 |
Interest rate | '11.75% over one month Libor | ' |
Maturity date | 'Apr-18 | ' |
Debt secured by receivables measured at fair value | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 13,117 | 57,107 |
Interest rate | 'n/a | ' |
Maturity date | 'Repayment is based on payments from underlying receivables.B B Final payment of the 8.00% loan was made in September 2013, with residual payments extending through 2016 | ' |
Senior Secured Debt Related Party 1 | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 37,128 | 50,135 |
Interest rate | '13.0% and 16.0% at December 31, 2013 and 2012, respectively | ' |
Maturity date | 'Jun-14 | ' |
Senior Secured Debt Related Party 2 | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 1,431 | 0 |
Interest rate | '5.00% | ' |
Maturity date | 'Jun-14 | ' |
Subordinated renewable notes | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | $19,142 | $23,281 |
Interest rate | 'Weighted average rate of 12.5% and 14.4% at December 31, 2013 and 2012, respectively | ' |
Maturity date | 'Weighted average maturity of July 2015 and June 2015 at December 31, 2013 and 2012, respectively | ' |
8_Debt_DetailsMaturity_Schedul
8. Debt (Details-Maturity Schedule) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
2014 | $56,292 |
2015 | 5,682 |
2016 | 4,426 |
2017 | 4,512 |
2018 | 4,667 |
Thereafter | 1,218 |
Total | 76,797 |
Senior secured debt, related party | ' |
2014 | 38,559 |
2015 | 0 |
2016 | 0 |
2017 | 0 |
2018 | 0 |
Thereafter | 0 |
Total | 38,559 |
Subordinated renewable notes | ' |
2014 | 11,400 |
2015 | 2,480 |
2016 | 3,267 |
2017 | 212 |
2018 | 565 |
Thereafter | 1,218 |
Total | 19,142 |
Residual interest financing | ' |
2014 | 6,333 |
2015 | 3,202 |
2016 | 1,159 |
2017 | 4,300 |
2018 | 4,103 |
Thereafter | 0 |
Total | $19,096 |
9_Shareholders_Equity_Details
9. Shareholders' Equity (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Equity [Abstract] | ' | ' |
Expected life (years) | '5 years 4 months 28 days | '5 years 7 months 17 days |
Risk-free interest rate | 0.73% | 1.32% |
Volatility | 80.00% | 79.00% |
Expected dividend yield | 0.00% | 0.00% |
9_Stock_Option_Activity_Detail
9. Stock Option Activity (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Number of Shares | ' |
Outstanding options, beginning balance | 8,652 |
Granted | 3,040 |
Exercised | -1,413 |
Forfeited/Expired | -151 |
Outstanding options, ending balance | 10,128 |
Options exercisable | 5,777 |
Outstanding options, beginning balance | $1.58 |
Granted | $7.43 |
Exercised | $1.50 |
Forfeited/Expired | $4.64 |
Outstanding options, ending balance | $3.30 |
Options exercisable | $2.17 |
Weighted Average Remaining Contractual Term | ' |
Outstanding options, ending balance | '6 years 4 months 24 days |
Options exercisable | '4 years 11 months 16 days |
11_Income_Taxes_DetailsIncome_
11. Income Taxes (Details-Income Tax Expense) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | ' | ' |
Current federal tax expense | $977 | $369 |
Current state tax expense | 365 | 49 |
Deferred federal tax expense | 13,306 | 2,826 |
Deferred state tax expense (benefit) | 1,520 | -654 |
Change in valuation allowance | 0 | -62,811 |
Income tax expense (benefit) | $16,168 | ($60,221) |
11_Income_Taxes_DetailsReconci
11. Income Taxes (Details-Reconciliation) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | ' | ' |
Expense at federal tax rate | $13,011 | $3,215 |
State taxes, net of federal income tax effect | 2,079 | 1,190 |
Other adjustments to tax reserve | -419 | -1,153 |
Effect of change in state tax rate | -239 | -1,105 |
Change in valuation allowance | 0 | -62,811 |
Stock-based compensation | 911 | 321 |
Non-deductible expenses | 619 | 63 |
Other | 206 | 59 |
Income tax expense/(benefit) | $16,168 | ($60,221) |
11_Income_Taxes_DetailsDeferre
11. Income Taxes (Details-Deferred Taxes) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Deferred Tax Assets: | ' | ' |
Finance receivables | $17,258 | $10,840 |
Accrued liabilities | 5,079 | 1,605 |
Furniture and equipment | 196 | 213 |
NOL carryforwards | 23,811 | 48,140 |
Built in losses | 13,074 | 14,406 |
Pension accrual | 0 | 2,080 |
AMT credit carryforward | 1,993 | 695 |
Other | 839 | 712 |
Total deferred tax assets | 62,250 | 78,691 |
Deferred Tax Liabilities: | ' | ' |
FAS 91 deferred costs | -1,555 | -1,114 |
Pension accrual | -1,136 | 0 |
Investment residual | -344 | -1,937 |
Total deferred tax liabilities | -3,035 | -3,051 |
Net deferred tax asset | $59,215 | $75,640 |
11_Income_Taxes_DetailsUnrecog
11. Income Taxes (Details-Unrecognized Tax Benefits) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | ' | ' |
Unrecognized tax benefit - opening balance | $1,331 | $2,405 |
Gross increases - tax positions in prior period | 0 | 0 |
Gross decreases - tax positions in prior period | 0 | 0 |
Gross increases - tax positions in current period | 0 | 250 |
Settlements | -686 | -153 |
Lapse of statute of limitations | -645 | -1,171 |
Unrecognized tax benefit - ending balance | $0 | $1,331 |
11_Income_Taxes_Details_Narrat
11. Income Taxes (Details Narrative) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Net deferred tax asset | 59,200 |
Net U.S. federal deferred tax assets | 47,800 |
Net state deferred tax assets | 11,400 |
Net operating loss carryforwards | 36,900 |
Net deductions | 22,300 |
Net operating loss carryforwards, federal | 48,400 |
Net operating loss carryforwards, state | 129,800 |
FederalMember | ' |
Net operating losses expire | 1-Jan-22 |
12_Related_Party_Transactions_
12. Related Party Transactions (Details Narrative) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Related Party Transactions [Abstract] | ' |
Related party amounts outstanding | $4,000 |
13_Commitments_and_Contingenci2
13. Commitments and Contingencies (Details) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | ' |
2014 | $3,249 |
2015 | 3,339 |
2016 | 2,898 |
2017 | 1,580 |
2018 | 1,228 |
Thereafter | 810 |
Total minimum lease payments | $13,104 |
13_Commitments_and_Contingenci3
13. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Rent expense | $2,600 | $2,900 |
14_Employee_Benefits_Funded_St
14. Employee Benefits - Funded Status (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Change in Projected Benefit Obligation | ' | ' |
Projected benefit obligation, beginning of year | $21,792 | $19,443 |
Service cost | 0 | 0 |
Interest cost | 823 | 875 |
Assumption changes | -2,420 | 2,332 |
Actuarial (gain) loss | -113 | 2 |
Settlements | 0 | 0 |
Benefits paids | -1,241 | -860 |
Projected benefit obligation, end of year | 18,841 | 21,792 |
Change in Plan Assets | ' | ' |
Fair value of plan assets, beginning of year | 16,612 | 10,613 |
Return on assets | 6,009 | 5,439 |
Employer contribution | 389 | 1,473 |
Expenses | -105 | -53 |
Settlements | 0 | 0 |
Benefits paid | -1,241 | -860 |
Fair value of plan assets, end of year | 21,664 | 16,612 |
Funded Status at end of year | $2,823 | ($5,180) |
14_Employee_Benefits_Assumptio
14. Employee Benefits - Assumptions (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Weighted average assumptions used to determine benefit obligations | ' | ' |
Discount rate | 4.75% | 3.91% |
Weighted average assumptions used to determine net periodic benefit cost | ' | ' |
Discount rate | 3.91% | 4.60% |
Expected return on plan assets | 8.25% | 8.50% |
14_Employee_Benefits_Accumulat
14. Employee Benefits - Accumulated Pension Benefit Obligation (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Amounts recognized on Consolidated Balance Sheet | ' | ' |
Other assets | $2,823 | $0 |
Other liabilities | 0 | -5,180 |
Net amount recognized | 2,823 | -5,180 |
Amounts recognized in accumulated other comprehensive income consists of: | ' | ' |
Net loss (gain) | 1,367 | 8,953 |
Unrecognized transition asset | 0 | 0 |
Net amount recognized | 1,367 | 8,953 |
Components of net periodic benefit cost | ' | ' |
Interest Cost | 823 | 875 |
Expected return on assets | -1,335 | -928 |
Amortization of net loss | 484 | 680 |
Settlement (gain)/loss | 0 | 0 |
Benefit Obligation Recognized in Other Comprehensive Income | ' | ' |
Net gain | -7,586 | -2,748 |
Prior service cost (credit) | 0 | 0 |
Amortization of prior service cost | 0 | 0 |
Net amount recognized in other comprehensive income | -7,586 | -2,748 |
Accumulated Pension Benefit Obligation | ($1,095) | ($5,637) |
14_Employee_Benefits_Asset_All
14. Employee Benefits - Asset Allocation (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Weighted Average Asset Allocation at Year-End | 100.00% | 100.00% |
Cash And Cash Equivalents [Member] | ' | ' |
Weighted Average Asset Allocation at Year-End | 0.00% | 1.00% |
Equity Securities [Member] | ' | ' |
Weighted Average Asset Allocation at Year-End | 87.00% | 83.00% |
Debt Securities [Member] | ' | ' |
Weighted Average Asset Allocation at Year-End | 13.00% | 16.00% |
14_Employee_Benefits_Estimated
14. Employee Benefits - Estimated Future Benefit Payments (Details) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Estimated Future Benefit Payments (In thousands) | ' |
2014 | $722 |
2015 | 816 |
2016 | 828 |
2017 | 862 |
2018 | 894 |
Years 2019 - 2023 | 5,075 |
Anticipated Contributions in 2014 | $562 |
14_Employee_Benefits_Fair_Valu
14. Employee Benefits - Fair Value of Plan Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | |||
Fair value of plan assets | $21,664 | $16,612 | $10,613 |
Company Common Stock [Member] | ' | ' | ' |
Fair value of plan assets | 8,319 | 4,791 | ' |
Fundamental Value [Member] | ' | ' | ' |
Fair value of plan assets | 2,384 | 2,049 | ' |
Mid Cap Growth [Member] | ' | ' | ' |
Fair value of plan assets | 709 | 596 | ' |
Focus Value [Member] | ' | ' | ' |
Fair value of plan assets | 692 | 607 | ' |
Small Co. Value [Member] | ' | ' | ' |
Fair value of plan assets | 693 | 604 | ' |
Growth [Member] | ' | ' | ' |
Fair value of plan assets | 3,237 | 2,681 | ' |
International Growth [Member] | ' | ' | ' |
Fair value of plan assets | 2,855 | 2,431 | ' |
Core Bond [Member] | ' | ' | ' |
Fair value of plan assets | 1,870 | 1,780 | ' |
High Yield [Member] | ' | ' | ' |
Fair value of plan assets | 387 | ' | ' |
Income [Member] | ' | ' | ' |
Fair value of plan assets | ' | 363 | ' |
Inflation Protected Bond [Member] | ' | ' | ' |
Fair value of plan assets | 487 | 472 | ' |
Money Market [Member] | ' | ' | ' |
Fair value of plan assets | 31 | 238 | ' |
Level 1 [Member] | ' | ' | ' |
Fair value of plan assets | 8,319 | 0 | ' |
Level 1 [Member] | Company Common Stock [Member] | ' | ' | ' |
Fair value of plan assets | 8,319 | 4,791 | ' |
Level 1 [Member] | Fundamental Value [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 1 [Member] | Mid Cap Growth [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 1 [Member] | Focus Value [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 1 [Member] | Small Co. Value [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 1 [Member] | Growth [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 1 [Member] | International Growth [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 1 [Member] | Core Bond [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 1 [Member] | High Yield [Member] | ' | ' | ' |
Fair value of plan assets | 0 | ' | ' |
Level 1 [Member] | Income [Member] | ' | ' | ' |
Fair value of plan assets | ' | 0 | ' |
Level 1 [Member] | Inflation Protected Bond [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 1 [Member] | Money Market [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 2 [Member] | ' | ' | ' |
Fair value of plan assets | 13,345 | 11,821 | ' |
Level 2 [Member] | Company Common Stock [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 2 [Member] | Fundamental Value [Member] | ' | ' | ' |
Fair value of plan assets | 2,384 | 2,049 | ' |
Level 2 [Member] | Mid Cap Growth [Member] | ' | ' | ' |
Fair value of plan assets | 709 | 596 | ' |
Level 2 [Member] | Focus Value [Member] | ' | ' | ' |
Fair value of plan assets | 692 | 607 | ' |
Level 2 [Member] | Small Co. Value [Member] | ' | ' | ' |
Fair value of plan assets | 693 | 604 | ' |
Level 2 [Member] | Growth [Member] | ' | ' | ' |
Fair value of plan assets | 3,237 | 2,681 | ' |
Level 2 [Member] | International Growth [Member] | ' | ' | ' |
Fair value of plan assets | 2,855 | 2,431 | ' |
Level 2 [Member] | Core Bond [Member] | ' | ' | ' |
Fair value of plan assets | 1,870 | 1,780 | ' |
Level 2 [Member] | High Yield [Member] | ' | ' | ' |
Fair value of plan assets | 387 | ' | ' |
Level 2 [Member] | Income [Member] | ' | ' | ' |
Fair value of plan assets | ' | 363 | ' |
Level 2 [Member] | Inflation Protected Bond [Member] | ' | ' | ' |
Fair value of plan assets | 487 | 472 | ' |
Level 2 [Member] | Money Market [Member] | ' | ' | ' |
Fair value of plan assets | 31 | 238 | ' |
Level 3 [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | Company Common Stock [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | Fundamental Value [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | Mid Cap Growth [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | Focus Value [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | Small Co. Value [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | Growth [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | International Growth [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | Core Bond [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | High Yield [Member] | ' | ' | ' |
Fair value of plan assets | 0 | ' | ' |
Level 3 [Member] | Income [Member] | ' | ' | ' |
Fair value of plan assets | ' | 0 | ' |
Level 3 [Member] | Inflation Protected Bond [Member] | ' | ' | ' |
Fair value of plan assets | 0 | 0 | ' |
Level 3 [Member] | Money Market [Member] | ' | ' | ' |
Fair value of plan assets | $0 | $0 | ' |
15_Fair_Value_measurements_Det
15. Fair Value measurements (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Finance Receivables Measured at Fair Value: | ' | ' |
Balance at beginning of period | $59,668 | $160,253 |
Payments on finance receivables at fair value | -43,122 | -104,682 |
Charge-offs on finance receivables at fair value | -2,896 | -6,681 |
Discount accretion | 1,421 | 4,144 |
Mark to fair value | -595 | 6,634 |
Balance at end of period | 14,476 | 59,668 |
Debt Secured by Finance Receivables Measured at Fair Value: | ' | ' |
Balance at beginning of period | 57,107 | 166,828 |
Principal payments on debt at fair value | -45,969 | -121,413 |
Premium accretion | 2,726 | 4,579 |
Mark to fair value | -747 | 7,113 |
Balance at end of period | 13,117 | 57,107 |
Reduction for principal payments collected and payable | -1,654 | -5,548 |
Adjusted balance at end of period | $11,463 | $51,559 |
15_Fair_Value_measurements_Fir
15. Fair Value measurements- Fireside Fair Value (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Contractual Balance [Member] | ' | ' |
Fair values of the Fireside receivables and the related secured debt to their contractual balances | ' | ' |
Fireside receivables portfolio | $14,786 | $60,804 |
Debt secured by Fireside receivables portfolio | 0 | 41,365 |
Fair Value [Member] | ' | ' |
Fair values of the Fireside receivables and the related secured debt to their contractual balances | ' | ' |
Fireside receivables portfolio | 14,476 | 59,668 |
Debt secured by Fireside receivables portfolio | $13,117 | $57,107 |
15_Fair_Value_measurements_Rec
15. Fair Value measurements - Reconciliation for level 3 (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Residual Interest in Securitizations: | ' | ' |
Balance at beginning of period | $4,824 | $4,414 |
Cash paid (received) during period | -3,970 | -48 |
Included in earnings | 0 | 458 |
Balance at end of period | 854 | 4,824 |
Warrant Derivative Liability: | ' | ' |
Balance at beginning of period | 355 | 967 |
Included in earnings | 228 | 695 |
Reclassification to equity | -583 | -1,307 |
Balance at end of period | $0 | $355 |
15_Fair_Value_Measurements_Lev
15. Fair Value Measurements - Level 3 fair value measurements (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | Finance receivables | Finance receivables | Residual Interest in Securitizations: | Residual Interest in Securitizations: | Warrant derivative liability | Warrant derivative liability | Debt secured by receivables measured at fair value | Debt secured by receivables measured at fair value | |||
Finance receivables measured at fair value | $14,476 | $59,668 | ' | $14,476 | $59,668 | ' | ' | ' | ' | ' | ' |
Residual interest in securitizations | 854 | 4,824 | ' | ' | ' | 854 | 4,824 | ' | ' | ' | ' |
Warrant derivative liability | 0 | 355 | 967 | ' | ' | ' | ' | 355 | 0 | ' | ' |
Debt secured by receivables measured at fair value | $13,117 | $57,107 | ' | ' | ' | ' | ' | ' | ' | $13,117 | $57,107 |
Valuation Techniques and Unobservable Inputs | ' | ' | ' | 'Discounted cash flows; Discount rate 15.40%, Cumulative net losses 5.00%, Monthly average prepayments 0.50% | 'Discounted cash flows; Discount rate 20.40%, Cumulative net losses, 5.50%, Monthly average prepayments 0.50% | 'Discounted cash flows; Discount rate 20.00%, Cumulative net losses 15.00%, Monthly average prepayments 0.50% | 'Discounted cash flows; Discount rate 20.00%, Cumulative net losses13.70%, Monthly average prepayments 0.50% | 'Binomial; Stock price $5.36/sh, Volatility 40%, Risk free rate 1.26% | ' | 'Discounted cash flows,B Discount rate 12.2% | 'Discounted cash flows,B Discount rate 16.2% |
15_Fair_Value_measurements_Fai
15. Fair Value measurements- Fair Value Financial Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets: | ' | ' |
Cash and cash equivalents | $22,112 | $12,966 |
Restricted cash and equivalents | 132,284 | 104,445 |
Finance receivables, net | 1,100,153 | 740,511 |
Finance receivables measured at fair value | 14,476 | 59,668 |
Residual interest in securitizations | 854 | 4,824 |
Accrued interest receivable | 18,670 | 10,411 |
Liabilities: | ' | ' |
Warehouse lines of credit | 9,452 | 21,731 |
Accrued interest payable | 2,908 | 2,795 |
Residual interest financing | 19,096 | 13,773 |
Debt secured by receivables measured at fair value | 13,117 | 57,107 |
Securitization trust debt | 1,189,086 | 803,290 |
Senior secured debt | 38,559 | 50,135 |
Subordinated renewable notes | 19,142 | 23,281 |
Fair Value Inputs Level 1 [Member] | ' | ' |
Assets: | ' | ' |
Cash and cash equivalents | 22,112 | 12,966 |
Restricted cash and equivalents | 132,284 | 104,445 |
Finance receivables, net | 0 | 0 |
Finance receivables measured at fair value | 0 | 0 |
Residual interest in securitizations | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Liabilities: | ' | ' |
Warehouse lines of credit | 0 | 0 |
Accrued interest payable | 0 | 0 |
Residual interest financing | 0 | 0 |
Debt secured by receivables measured at fair value | 0 | 0 |
Securitization trust debt | 0 | 0 |
Senior secured debt | 0 | 0 |
Subordinated renewable notes | 0 | 0 |
Level 2 [Member] | ' | ' |
Assets: | ' | ' |
Cash and cash equivalents | 0 | 0 |
Restricted cash and equivalents | 0 | 0 |
Finance receivables, net | 0 | 0 |
Finance receivables measured at fair value | 0 | 0 |
Residual interest in securitizations | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Liabilities: | ' | ' |
Warehouse lines of credit | 0 | 0 |
Accrued interest payable | 0 | 0 |
Residual interest financing | 0 | 0 |
Debt secured by receivables measured at fair value | 0 | 0 |
Securitization trust debt | 0 | 0 |
Senior secured debt | 0 | 0 |
Subordinated renewable notes | 0 | 0 |
Level 3 [Member] | ' | ' |
Assets: | ' | ' |
Cash and cash equivalents | 0 | 0 |
Restricted cash and equivalents | 0 | 0 |
Finance receivables, net | 1,100,153 | 740,511 |
Finance receivables measured at fair value | 14,476 | 59,668 |
Residual interest in securitizations | 854 | 4,824 |
Accrued interest receivable | 18,670 | 10,411 |
Liabilities: | ' | ' |
Warehouse lines of credit | 9,452 | 21,731 |
Accrued interest payable | 2,908 | 2,795 |
Residual interest financing | 19,096 | 13,773 |
Debt secured by receivables measured at fair value | 13,117 | 57,107 |
Securitization trust debt | 1,189,086 | 803,290 |
Senior secured debt | 38,559 | 50,135 |
Subordinated renewable notes | 19,142 | 23,281 |
Carrying Value [Member] | ' | ' |
Assets: | ' | ' |
Cash and cash equivalents | 22,112 | 12,966 |
Restricted cash and equivalents | 132,284 | 104,445 |
Finance receivables, net | 1,115,437 | 744,749 |
Finance receivables measured at fair value | 14,476 | 59,668 |
Residual interest in securitizations | 854 | 4,824 |
Accrued interest receivable | 18,670 | 10,411 |
Liabilities: | ' | ' |
Warehouse lines of credit | 9,452 | 21,731 |
Accrued interest payable | 2,908 | 2,795 |
Residual interest financing | 19,096 | 13,773 |
Debt secured by receivables measured at fair value | 13,117 | 57,107 |
Securitization trust debt | 1,177,559 | 792,497 |
Senior secured debt | 38,559 | 50,135 |
Subordinated renewable notes | $19,142 | $23,281 |