Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 21, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'CONSUMER PORTFOLIO SERVICES INC | ' |
Entity Central Index Key | '0000889609 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
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 | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 25,371,198 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
UNAUDITED_CONDENSED_CONSOLIDAT
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $13,136 | $22,112 |
Restricted cash and equivalents | 174,634 | 132,284 |
Finance receivables | 1,462,430 | 1,155,063 |
Less: Allowance for finance credit losses | -54,621 | -39,626 |
Finance receivables, net | 1,407,809 | 1,115,437 |
Finance receivables measured at fair value | 3,202 | 14,476 |
Residual interest in securitizations | 135 | 854 |
Furniture and equipment, net | 1,066 | 766 |
Deferred financing costs | 11,954 | 11,071 |
Deferred tax assets, net | 46,587 | 59,215 |
Accrued interest receivable | 21,600 | 18,670 |
Other assets | 24,793 | 21,481 |
Total | 1,704,916 | 1,396,366 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ' | ' |
Accounts payable and accrued expenses | 22,873 | 24,839 |
Warehouse lines of credit | 59,442 | 9,452 |
Residual interest financing | 12,767 | 19,096 |
Debt secured by receivables measured at fair value | 3,170 | 13,117 |
Securitization trust debt | 1,469,670 | 1,177,559 |
Senior secured debt, related party | 0 | 38,559 |
Subordinated renewable notes | 15,493 | 19,142 |
Total | 1,583,415 | 1,301,764 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
Shareholders' Equity | ' | ' |
Common stock, no par value; authorized 75,000,000 shares; 25,339,698 and 24,015,585 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 78,815 | 73,422 |
Retained earnings | 43,781 | 22,275 |
Accumulated other comprehensive loss | -1,095 | -1,095 |
Total | 121,501 | 94,602 |
Total | 1,704,916 | 1,396,366 |
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 |
UNAUDITED_CONDENSED_CONSOLIDAT1
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
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, No Par Value | $0 | $0 |
Common Stock, Authorized | 75,000,000 | 75,000,000 |
Common Stock, Issued | 25,339,698 | 24,015,585 |
Common Stock, Outstanding | 25,339,698 | 24,015,585 |
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 |
UNAUDITED_CONDENSED_CONSOLIDAT2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenues: | ' | ' | ' | ' |
Interest income | $73,865 | $60,462 | $207,082 | $167,426 |
Servicing fees | 278 | 700 | 1,158 | 2,484 |
Other income | 2,907 | 2,904 | 8,550 | 8,284 |
Gain on cancellation of debt | 0 | 0 | 0 | 10,947 |
Total | 77,050 | 64,066 | 216,790 | 189,141 |
Expenses: | ' | ' | ' | ' |
Employee costs | 12,733 | 11,199 | 35,397 | 31,675 |
General and administrative | 5,804 | 4,074 | 14,482 | 12,346 |
Interest | 12,239 | 13,853 | 37,562 | 44,800 |
Provision for credit losses | 27,287 | 20,220 | 76,795 | 52,739 |
Provision for contingent liabilities | 0 | 0 | 0 | 9,650 |
Marketing | 4,167 | 3,378 | 11,826 | 10,032 |
Occupancy | 898 | 695 | 2,493 | 1,921 |
Depreciation and amortization | 118 | 88 | 339 | 345 |
Total | 63,246 | 53,507 | 178,894 | 163,508 |
Income before income tax expense | 13,804 | 10,559 | 37,896 | 25,633 |
Income tax expense | 6,028 | 4,686 | 16,390 | 11,150 |
Net income | $7,776 | $5,873 | $21,506 | $14,483 |
Income per share: | ' | ' | ' | ' |
Basic | $0.31 | $0.27 | $0.86 | $0.69 |
Diluted | $0.24 | $0.19 | $0.67 | $0.46 |
Number of shares used in computing income per share: | ' | ' | ' | ' |
Basic | 25,290,000 | 21,795,000 | 24,895,000 | 20,959,000 |
Diluted | 32,040,000 | 31,217,000 | 32,021,000 | 31,550,000 |
UNAUDITED_CONDENSED_CONSOLIDAT3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Unaudited Condensed Consolidated Statements Of Comprehensive Income | ' | ' | ' | ' |
Net income | $7,776 | $5,873 | $21,506 | $14,483 |
Other comprehensive income/(loss); change in funded status of pension plan | 0 | 0 | 0 | 0 |
Comprehensive income | $7,776 | $5,873 | $21,506 | $14,483 |
UNAUDITED_CONDENSED_CONSOLIDAT4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $21,506 | $14,483 |
Accretion of deferred acquisition fees | -12,793 | -15,543 |
Accretion of purchase discount on receivables measured at fair value | -353 | -1,247 |
Amortization of discount on securitization trust debt | 106 | 53 |
Amortization of discount on senior secured debt, related party | 623 | 1,681 |
Accretion of premium on debt secured by receivables measured at fair value | 631 | 2,079 |
Mark to fair value on debt secured by receivables at fair value | 339 | -933 |
Mark to fair value of receivables measured at fair value | -43 | 595 |
Depreciation and amortization | 339 | 345 |
Amortization of deferred financing costs | 5,054 | 2,874 |
Provision for credit losses | 76,795 | 52,739 |
Provision for contingent liabilities | 0 | 9,650 |
Stock-based compensation expense | 2,578 | 2,939 |
Interest income on residual assets | -320 | 0 |
Gain on cancellation of debt | 0 | -10,947 |
Changes in assets and liabilities: | ' | ' |
Accrued interest receivable | -2,930 | -4,735 |
Deferred tax assets, net | 12,628 | 9,474 |
Other assets | -1,220 | 680 |
Accounts payable and accrued expenses | -1,966 | 6,965 |
Net cash provided by operating activities | 100,974 | 71,152 |
Cash flows from investing activities: | ' | ' |
Purchases of finance receivables held for investment | -680,569 | -592,327 |
Payments received on finance receivables held for investment | 324,195 | 253,062 |
Payments on receivables portfolio at fair value | 11,670 | 39,103 |
Proceeds received on residual interest in securitizations | 1,039 | 3,398 |
Change in repossessions in inventory | -2,092 | -3,020 |
Decreases (increases) in restricted cash and cash equivalents, net | -42,350 | -25,005 |
Purchase of furniture and equipment | -639 | -226 |
Net cash used in investing activities | -388,746 | -325,015 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of securitization trust debt | 655,500 | 595,000 |
Proceeds from issuance of subordinated renewable notes | 406 | 1,380 |
Payments on subordinated renewable notes | -4,055 | -4,021 |
Net proceeds from (repayments of) warehouse lines of credit | 49,990 | 5,228 |
Proceeds from (repayments of) residual interest financing debt | -6,329 | 6,227 |
Repayment of securitization trust debt | -363,495 | -282,044 |
Repayment of debt secured by receivables measured at fair value | -10,917 | -41,365 |
Repayment of senior secured debt, related party | -39,182 | -12,852 |
Payment of financing costs | -5,937 | -4,898 |
Repurchase of common stock | 0 | 0 |
Exercise of options and warrants | 2,815 | 2,370 |
Net cash provided by financing activities | 278,796 | 265,025 |
Increase (decrease) in cash and cash equivalents | -8,976 | 11,162 |
Cash and cash equivalents at beginning of period | 22,112 | 12,966 |
Cash and cash equivalents at end of period | 13,136 | 24,128 |
Cash paid during the period for: | ' | ' |
Interest | 32,864 | 41,936 |
Income taxes | 6,259 | 2,058 |
Non-cash financing activities: | ' | ' |
Derivative warrants reclassified from accounts payable to common stock | $0 | $583 |
1_Summary_of_Significant_Accou
1. Summary of Significant Accounting Policies | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||||||||
Description of Business | |||||||||||||||||
We were formed in California on March 8, 1991. We specialize in purchasing and servicing retail automobile installment sale contracts (“automobile contracts” or “finance receivables”) originated by licensed motor vehicle dealers located throughout the United States (“dealers”) in the sale of new and used automobiles, light trucks and passenger vans. Through our purchases, we provide indirect financing to dealer customers for borrowers with limited credit histories or past credit problems (“sub-prime customers”). We serve as an alternative source of financing for dealers, allowing sales to customers who otherwise might not be able to obtain financing. In addition to purchasing installment purchase contracts directly from dealers, we have also (i) acquired installment purchase contracts in four merger and acquisition transactions, (ii) purchased immaterial amounts of vehicle purchase money loans from non-affiliated lenders, and (iii) lent money directly to consumers for an immaterial amount of loans secured by vehicles. In this report, we refer to all of such contracts and loans as "automobile contracts." | |||||||||||||||||
Basis of Presentation | |||||||||||||||||
Our Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, with the instructions to Form 10-Q and with Article 10 of Regulation S-X of the Securities and Exchange Commission, and include all adjustments that are, in management’s opinion, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. Results for the nine-month period ended September 30, 2014 are not necessarily indicative of the operating results to be expected for the full year. | |||||||||||||||||
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these Unaudited Condensed Consolidated Financial Statements. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013. | |||||||||||||||||
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, valuing residual interest in securitizations, accreting net acquisition fees, amortizing deferred costs, valuing stock options and warrants issued, 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. | |||||||||||||||||
Other Income | |||||||||||||||||
The following table presents the primary components of Other Income for the three-month and nine-month periods ending September 30, 2014 and 2013: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Direct mail revenues | $ | 1,921 | $ | 1,691 | $ | 5,944 | $ | 5,418 | |||||||||
Convenience fee revenue | 840 | 720 | 2,450 | 2,235 | |||||||||||||
Recoveries on previously charged-off contracts | 39 | 49 | 121 | 153 | |||||||||||||
Sales tax refunds | 129 | – | 360 | 84 | |||||||||||||
Other | (22 | ) | 444 | (325 | ) | 394 | |||||||||||
Other income for the period | $ | 2,907 | $ | 2,904 | $ | 8,550 | $ | 8,284 | |||||||||
Stock-based Compensation | |||||||||||||||||
We recognize compensation costs in the financial statements for all share-based payments based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. | |||||||||||||||||
For the nine months ended September 30, 2014 and 2013, we recorded stock-based compensation costs in the amount of $2.6 million and $2.9 million, respectively. As of September 30, 2014, unrecognized stock-based compensation costs to be recognized over future periods equaled $15.2 million. This amount will be recognized as expense over a weighted-average period of 3.2 years. | |||||||||||||||||
The following represents stock option activity for the nine months ended September 30, 2014: | |||||||||||||||||
Weighted | |||||||||||||||||
Number of | Weighted | Average | |||||||||||||||
Shares | Average | Remaining | |||||||||||||||
(in thousands) | Exercise Price | Contractual Term | |||||||||||||||
Options outstanding at the beginning of period | 10,128 | $ | 3.3 | N/A | |||||||||||||
Granted | 2,030 | 6.59 | N/A | ||||||||||||||
Exercised | (1,168 | ) | 2.06 | N/A | |||||||||||||
Forfeited | (103 | ) | 4.58 | N/A | |||||||||||||
Options outstanding at the end of period | 10,887 | $ | 4.04 | 6.24 years | |||||||||||||
Options exercisable at the end of period | 5,719 | $ | 2.53 | 5.09 years | |||||||||||||
At September 30, 2014, the aggregate intrinsic value of options outstanding and exercisable was $29.1 million and $23.0 million, respectively. There were 1,168,000 options exercised for the nine months ended September 30, 2014 compared to 1,116,000 for the comparable period in 2013. There were 2.1 million shares available for future stock option grants under existing plans as of September 30, 2014. The per share weighted-average fair value of stock options granted during the nine months ended September 30, 2014 was $2.73. | |||||||||||||||||
Purchases of Company Stock | |||||||||||||||||
During the nine-month period ended September 30, 2014 and 2013, we re-purchased 73,788 and 323,674 shares, respectively, of our common stock, at average prices of $7.91 and $7.68, respectively. All purchases were related to net exercises of outstanding options and warrants. In transactions during the nine-month period ended September 30, 2014, the holder of options and warrants to purchase 395,000 shares of our common stock paid the aggregate $583,000 exercise price by surrender to us of 73,788 of such 395,000 shares. There were no open market purchases of our common stock. | |||||||||||||||||
New Accounting Pronouncements | |||||||||||||||||
In May 2014, the FASB issued an update (ASU No. 2014-09, Revenue from Contracts with Customers) creating FASB Topic 606, Revenue from Contracts with Customers. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides steps to follow to achieve the core principle. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements. | |||||||||||||||||
Reclassifications | |||||||||||||||||
Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or total shareholders’ equity. | |||||||||||||||||
Financial Covenants | |||||||||||||||||
Certain of our securitization transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. As of September 30, 2014, we were in compliance with all such covenants. In addition, certain securitization and non-securitization related debt agreements contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. | |||||||||||||||||
Finance Receivables and Related Debt Measured at Fair Value | |||||||||||||||||
In September 2011 we purchased approximately $217.8 million of finance receivables from Fireside Bank. These receivables and the related acquisition debt are recorded on our balance sheet at fair value. There are no level 1 or level 2 inputs (as described by ASC 820) available to us for measurement of such receivables, or for the related debt. 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. 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. | |||||||||||||||||
Gain on Cancellation of Debt | |||||||||||||||||
In April 2013, we repurchased the outstanding Class D notes issued by our first 2008 securitization trust, 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 held 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. We subsequently exercised our “clean-up call” option and repurchased the remaining collateral from the related securitization trust. The aggregate value of our consideration given 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 for the nine-month period ended September 30, 2013. | |||||||||||||||||
Provision for Contingent Liabilities | |||||||||||||||||
We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Our legal counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that it is both probable that a liability has been incurred and the amount of the loss can be reasonably determined. | |||||||||||||||||
In June 2013, we recognized $9.7 million in contingent liability expenses to either record or increase the amounts we believed represented our best estimate of probable incurred losses related to various matters. The amount was allocated in part to a long running case (“Pardee”) in which we were sued for indemnity, and also to more recent matters. In September 2014 we reached a settlement, of the Pardee case, pursuant to which we paid $5.99 million and all claims against us were fully and finally discharged. | |||||||||||||||||
The more recent matters included two California class action suits where we are the defendant, and a governmental inquiry, in which the United States Federal Trade Commission (“FTC”) had informally proposed that we refrain from certain allegedly unfair trade practices, and make restitutionary payments into a consumer relief fund. In May 2014, the FTC announced its agreement to settle the matter by filing a lawsuit against us, and requesting, with our consent, that the court enter an agreed judgment against us. The lawsuit arose out of the FTC’s inquiry into our business practices. Under the agreed settlement, we made approximately $1.9 million of restitutionary payments and $1.6 million of account adjustments to our customers in September 2014, and paid a $2 million penalty to the federal government in June 2014, and implemented procedural changes, all pursuant to a consent decree which was entered by the court in June 2014. | |||||||||||||||||
We have recorded a liability as of September 30, 2014, which represents our best estimate of probable incurred losses for legal contingencies. The amount of losses that may ultimately be incurred cannot be estimated with certainty. |
2_Finance_Receivables
2. Finance Receivables | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
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. For key terms such as interest rate, length of contract, monthly payment and amount financed, there is relatively little variation from the average for the 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: | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Finance Receivables | (In thousands) | ||||||||||||||||
Automobile finance receivables, net of unearned interest | $ | 1,481,410 | $ | 1,182,950 | |||||||||||||
Less: Unearned acquisition fees and originations costs | (18,980 | ) | (27,887 | ) | |||||||||||||
Finance Receivables | $ | 1,462,430 | $ | 1,155,063 | |||||||||||||
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 September 30, 2014 and December 31, 2013: | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Deliquency Status | |||||||||||||||||
Current | $ | 1,412,427 | $ | 1,125,926 | |||||||||||||
31 - 60 days | 38,800 | 21,421 | |||||||||||||||
61 - 90 days | 17,398 | 24,663 | |||||||||||||||
91 + days | 12,785 | 10,940 | |||||||||||||||
$ | 1,481,410 | $ | 1,182,950 | ||||||||||||||
Finance receivables totaling $12.8 million and $10.9 million at September 30, 2014 and December 31, 2013, respectively, including all receivables greater than 90 days delinquent, have been placed on non-accrual status as a result of their delinquency status. | |||||||||||||||||
We use a loss allowance methodology commonly referred to as "static pooling," which stratifies our finance receivable portfolio into separately identified pools based on the period of origination. 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 automobile contracts. The estimate for probable incurred credit losses is reduced by our estimate for future recoveries on previously incurred losses. Provision for losses is charged to our consolidated statement of operations. Net losses incurred on finance receivables are charged to the allowance. We establish the allowance for new receivables over the 12-month period following their acquisition. | |||||||||||||||||
The following table presents a summary of the activity for the allowance for finance credit losses for the three-month and nine-month periods ended September 30, 2014 and 2013: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 53,326 | $ | 32,101 | $ | 39,626 | $ | 19,594 | |||||||||
Provision for credit losses on finance receivables | 27,287 | 20,220 | 76,795 | 52,739 | |||||||||||||
Charge-offs | (29,988 | ) | (20,952 | ) | (80,514 | ) | (47,229 | ) | |||||||||
Recoveries | 3,996 | 3,095 | 18,714 | 9,360 | |||||||||||||
Balance at end of period | $ | 54,621 | $ | 34,464 | $ | 54,621 | $ | 34,464 | |||||||||
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 in repossessed inventory that is not included in the allowance for finance credit losses: | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Gross balance of repossessions in inventory | $ | 31,276 | $ | 24,743 | |||||||||||||
Allowance for losses on repossessed inventory | (19,220 | ) | (14,779 | ) | |||||||||||||
Net repossessed inventory included in other assets | $ | 12,056 | $ | 9,964 | |||||||||||||
3_Finance_Receivables_Measured
3. Finance Receivables Measured at Fair Value | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
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: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Finance Receivables Measured at Fair Value | (In thousands) | ||||||||
Finance receivables and accrued interest, net of unearned interest | $ | 3,202 | $ | 14,786 | |||||
Less: Fair value adjustment | – | (310 | ) | ||||||
Finance receivables measured at fair value | $ | 3,202 | $ | 14,476 | |||||
The following table summarizes the delinquency status of finance receivables measured at fair value as of September 30, 2014 and December 31, 2013: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(In thousands) | |||||||||
Delinquency Status | |||||||||
Current | $ | 2,783 | $ | 13,421 | |||||
31 - 60 days | 295 | 878 | |||||||
61 - 90 days | 84 | 253 | |||||||
91 + days | 40 | 234 | |||||||
$ | 3,202 | $ | 14,786 | ||||||
4_Securitization_Trust_Debt
4. Securitization Trust Debt | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||
Securitization Trust Debt | ' | ||||||||||||||||||||||
Securitization Trust Debt | ' | ||||||||||||||||||||||
We have completed many securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our Unaudited Condensed Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table: | |||||||||||||||||||||||
Weighted | |||||||||||||||||||||||
Average | |||||||||||||||||||||||
Final | Receivables | Outstanding | Outstanding | Contractual | |||||||||||||||||||
Scheduled | Pledged at | Principal at | Principal at | Interest Rate at | |||||||||||||||||||
Payment | September 30, | Initial | September 30, | December 31, | September 30, | ||||||||||||||||||
Series | Date (1) | 2014 (2) | Principal | 2014 | 2013 | 2014 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Page Five Funding | Jan-18 | $ | 5,781 | $ | 46,058 | $ | 3,862 | $ | 9,358 | 9.28% | |||||||||||||
CPS 2011-A | Apr-18 | 15,687 | 104,546 | 11,665 | 24,526 | 2.86% | |||||||||||||||||
CPS 2011-B | Sep-18 | 27,632 | 111,046 | 27,235 | 44,433 | 4.53% | |||||||||||||||||
CPS 2011-C | Mar-19 | 35,992 | 119,400 | 35,773 | 56,271 | 4.92% | |||||||||||||||||
CPS 2012-A | Jun-19 | 42,577 | 155,000 | 41,703 | 65,051 | 3.44% | |||||||||||||||||
CPS 2012-B | Sep-19 | 58,409 | 141,500 | 57,490 | 86,254 | 3.14% | |||||||||||||||||
CPS 2012-C | Dec-19 | 64,289 | 147,000 | 63,376 | 93,006 | 2.48% | |||||||||||||||||
CPS 2012-D | Mar-20 | 77,951 | 160,000 | 77,234 | 108,815 | 2.14% | |||||||||||||||||
CPS 2013-A | Jun-20 | 110,393 | 185,000 | 109,937 | 142,842 | 2.00% | |||||||||||||||||
CPS 2013-B | Sep-20 | 133,324 | 205,000 | 131,358 | 172,499 | 2.45% | |||||||||||||||||
CPS 2013-C | Dec-20 | 150,069 | 205,000 | 147,671 | 191,504 | 2.64% | |||||||||||||||||
CPS 2013-D | Mar-21 | 148,167 | 183,000 | 144,868 | 183,000 | 2.36% | |||||||||||||||||
CPS 2014-A | Jun-21 | 159,479 | 180,000 | 155,381 | – | 1.98% | |||||||||||||||||
CPS 2014-B | Sep-21 | 192,600 | 202,500 | 189,117 | – | 1.82% | |||||||||||||||||
CPS 2014-C (3) | Dec-21 | 182,936 | 273,000 | 273,000 | – | 2.05% | |||||||||||||||||
$ | 1,405,286 | $ | 2,418,050 | $ | 1,469,670 | $ | 1,177,559 | ||||||||||||||||
____________ | |||||||||||||||||||||||
-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 $152.6 million in 2014, $559.0 million in 2015, $386.0 million in 2016, $225.3 million in 2017, $108.1 million in 2018 and $38.7 million in 2019. | ||||||||||||||||||||||
-2 | Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet. | ||||||||||||||||||||||
-3 | An additional $87.8 million of receivables were pledged to CPS 2014-C in October 2014. | ||||||||||||||||||||||
All of the securitization trust debt was sold in private placement transactions to qualified institutional buyers. The debt was issued through our wholly-owned bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by our other assets. | |||||||||||||||||||||||
The terms of the securitization agreements related to the issuance of the securitization trust debt and the warehouse credit facilities require that we meet certain delinquency and credit loss criteria with respect to the pool of receivables, and certain of the agreements require that we maintain minimum levels of liquidity and not exceed maximum leverage levels. In addition, certain securitization and non-securitization related debt contain cross-default provisions, which would allow certain creditors to declare a default if a default were declared under a different facility. As of September 30, 2014, we were in compliance with all such covenants. | |||||||||||||||||||||||
We are responsible for the administration and collection of the automobile contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional collateral for the borrowings, to be applied to make payments on the securitization trust debt or as pre-funding proceeds from a term securitization prior to the purchase of additional collateral. As of September 30, 2014, restricted cash under the various agreements totaled approximately $174.6 million, of which $87.8 million represented pre-funding proceeds. Interest expense on the securitization trust debt consists of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, amortization of deferred financing costs and discounts on notes sold. Deferred financing costs and discounts on notes sold related to the securitization trust debt are amortized using a level yield method. Accordingly, the effective cost of the securitization trust debt is greater than the contractual rate of interest disclosed above. | |||||||||||||||||||||||
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 credit facilities. 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 other creditors. |
5_Debt
5. Debt | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||
Debt | ' | ||||||||||||
The terms and amounts of our other debt outstanding at September 30, 2014 and December 31, 2013 are summarized below: | |||||||||||||
Amount Outstanding at | |||||||||||||
September 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
(In thousands) | |||||||||||||
Description | Interest Rate | Maturity | |||||||||||
Warehouse lines of credit | 5.73% over one month Libor (Minimum 6.73%) | Mar-17 | $ | 27,545 | $ | 9,452 | |||||||
5.50% over one month Libor (Minimum 6.25%) | Aug-17 | 31,897 | – | ||||||||||
Residual interest financing | 11.75% over one month Libor | Apr-18 | 12,767 | 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 | 3,170 | 13,117 | |||||||||
Senior secured debt, related party | 13.00% | n/a | – | 37,128 | |||||||||
5.00% | n/a | – | 1,431 | ||||||||||
Subordinated renewable notes | Weighted average rate of 10.8% and 12.5% at September 30, 2014 and December 31, 2013, respectively | Weighted average maturity of May 2016 and July 2015 at September 30, 2014 and December 31, 2013, respectively | 15,493 | 19,142 | |||||||||
$ | 90,872 | $ | 99,366 | ||||||||||
In January and March 2014 we prepaid, without penalty, $10 million and $28.4 million, respectively, of senior secured debt, related party. The debt was scheduled to mature in June 2014. | |||||||||||||
6_Interest_Income_and_Interest
6. Interest Income and Interest Expense | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Interest Income And Interest Expense | ' | ||||||||||||||||
Interest Income and Interest Expense | ' | ||||||||||||||||
The following table presents the components of interest income: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Interest on finance receivables | $ | 73,781 | $ | 60,462 | $ | 206,761 | $ | 167,416 | |||||||||
Residual interest income | 84 | – | 320 | – | |||||||||||||
Other interest income | – | – | 1 | 10 | |||||||||||||
Interest income | $ | 73,865 | $ | 60,462 | $ | 207,082 | $ | 167,426 | |||||||||
The following table presents the components of interest expense: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Securitization trust debt | $ | 9,582 | $ | 8,357 | $ | 28,279 | $ | 25,725 | |||||||||
Warehouse lines of credit | 1,531 | 1,447 | 3,646 | 4,026 | |||||||||||||
Senior secured debt, related party | – | 1,599 | 1,651 | 6,474 | |||||||||||||
Debt secured by receivables at fair value | 150 | 623 | 683 | 3,435 | |||||||||||||
Residual interest financing | 462 | 1,079 | 1,545 | 2,666 | |||||||||||||
Subordinated renewable notes | 514 | 748 | 1,758 | 2,474 | |||||||||||||
Interest expense | $ | 12,239 | $ | 13,853 | $ | 37,562 | $ | 44,800 | |||||||||
7_Earnings_Per_Share
7. Earnings Per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Income per share: | ' | ||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||
Earnings per share for the three-month and nine-month periods ended September 30, 2014 and 2013 were calculated using the weighted average number of shares outstanding for the related period. The following table reconciles the number of shares used in the computations of basic and diluted earnings per share for the three-month and nine-month periods ended September 30, 2014 and 2013: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Weighted average number of common shares outstanding during the period used to compute basic earnings per share | 25,290 | 21,795 | 24,895 | 20,959 | |||||||||||||
Incremental common shares attributable to exercise of outstanding options and warrants | 6,750 | 9,422 | 7,126 | 10,591 | |||||||||||||
Weighted average number of common shares used to compute diluted earnings per share | 32,040 | 31,217 | 32,021 | 31,550 | |||||||||||||
If the anti-dilutive effects of common stock equivalents were considered, shares included in the diluted earnings per share calculation for the three-month and nine-month periods ended September 30, 2014 would have included an additional 4.0 and 3.1 million shares, respectively attributable to the exercise of outstanding options and warrants. For the three-month and nine-month periods ended September 30, 2013, the anti-dilutive shares were 3.1 million and 1.9 million, respectively. |
8_Income_Taxes
8. Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
We file numerous consolidated and separate income tax returns with the United States and with many states. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2010. | |
As of September 30, 2014 and December 31, 2013, we had no unrecognized tax benefits for uncertain tax positions. We do not anticipate that total unrecognized tax benefits will significantly change due to any settlements of audits or expirations of statutes of limitations over the next 12 months. | |
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. | |
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 judgments, significant weight is given to evidence that can be objectively verified. Although realization is not assured, we believe that the realization of the recognized net deferred tax asset of $46.6 million as of September 30, 2014 is more likely than not based on forecasted future net earnings. Our net deferred tax asset of $46.6 million consists of approximately $35.2 million of net U.S. federal deferred tax assets and $11.4 million of net state deferred tax assets. We estimate that we would need to generate approximately $108 million of taxable income during the applicable carryforward periods to realize fully our federal and state net deferred tax assets. | |
Income tax expense was $6.0 million and $16.4 million for the three months and nine months ended September 30, 2014 and represents an effective income tax rate of 44% and 43%, respectively, compared to income tax expense of $4.7 million and $11.2 million for the three months and nine months ended September 30, 2013, representing effective income tax rates of 44% and 43%, respectively. |
9_Legal_Proceedings
9. Legal Proceedings | 9 Months Ended |
Sep. 30, 2014 | |
Legal Proceedings | ' |
Legal Proceedings | ' |
Stanwich Litigation. We were for several years 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 was removed from state court to federal district court in Rhode Island. We filed counterclaims in the Rhode Island federal court against Mr. Pardee, and have filed a separate action, in the same court, against the Rhode Island law firm that represented Mr. Pardee. 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 was 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 were resolved without his incurring any liability. Accordingly, we believe that this resolution of the adversary action resulted 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 was subsequently lifted, and the matter was set for trial, to commence September 12, 2014. The issues remaining for trial were the extent of our obligation to indemnify Mr. Pardee. Shortly before trial was to commence we reached a settlement, pursuant to which we paid $5.99 million to Mr. Pardee, and all of his claims against us were fully and finally discharged. | |
The separate lawsuit between us and Mr. Pardee's Rhode Island law firm has not been resolved. There can be no assurance that we will recover anything against that firm, and it is possible that the counterclaim of that firm against us could result in our incurring liability, in an amount not expected to be material. | |
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 September 30, 2014 with respect to such matters, in the aggregate. | |
FTC Action. In July 2013, the staff of the U.S. Federal Trade Commission (“FTC”) advised us that they were 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 might be achieved. On May 29, 2014, the FTC announced its agreement to settle the matter by filing a lawsuit against us, and requesting, with our consent, that the court enter an agreed judgment against us. The lawsuit arose out of the FTC’s inquiry into our business practices. Under the agreed settlement, we made approximately $1.9 million of restitutionary payments and $1.6 million of account adjustments to our customers in September 2014, paid a $2 million penalty to the federal government in June 2014, and implemented procedural changes, all pursuant to a consent decree that was entered by the court in June 2014. | |
In General. There can be no assurance as to the outcomes of the matters referenced above. We have recorded a liability as of September 30, 2014, 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 we face, including those described or referenced above, as of September 30, 2014, and in excess of the liability we have recorded, is from $0 to $1.3 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. |
10_Employee_Benefits
10. Employee Benefits | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Employee Benefits | ' | ||||||||||||||||
Employee Benefits | ' | ||||||||||||||||
On March 8, 2002 we acquired MFN Financial Corporation and its subsidiaries in a merger. We sponsor the MFN Financial Corporation Benefit Plan (the “Plan”). Plan benefits were frozen June 30, 2001. The table below sets forth the Plan’s net periodic benefit cost for the three-month and nine-month periods ended September 30, 2014 and 2013. | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Components of net periodic cost (benefit) | |||||||||||||||||
Service cost | $ | – | $ | – | $ | – | $ | – | |||||||||
Interest cost | 220 | 210 | 660 | 630 | |||||||||||||
Expected return on assets | (432 | ) | (335 | ) | (1,296 | ) | (1,005 | ) | |||||||||
Amortization of transition (asset)/obligation | – | – | – | – | |||||||||||||
Amortization of net (gain) / loss | – | 117 | – | 351 | |||||||||||||
Net periodic cost (benefit) | $ | (212 | ) | $ | (8 | ) | $ | (636 | ) | $ | (24 | ) | |||||
We contributed $237,000 to the Plan during the nine-month period ended September 30, 2014 and we do not anticipate making any further contributions for the remainder of 2014. |
11_Fair_Value_Measurements
11. Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
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. | |||||||||||||||||||||
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 $135,000 as of September 30, 2014 and $854,000 as of December 31, 2013 and is classified as level 3 in the three-level valuation 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 September 30, 2014 and December 31, 2013. 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: | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||
Finance Receivables Measured at Fair Value: | |||||||||||||||||||||
Balance at beginning of period | $ | 5,686 | $ | 30,319 | $ | 14,476 | $ | 59,668 | |||||||||||||
Payments on finance receivables at fair value | (3,057 | ) | (8,848 | ) | (10,930 | ) | (36,828 | ) | |||||||||||||
Charge-offs on finance receivables at fair value | (184 | ) | (535 | ) | (740 | ) | (2,275 | ) | |||||||||||||
Discount accretion | 722 | 263 | 353 | 1,247 | |||||||||||||||||
Mark to fair value | 35 | 18 | 43 | (595 | ) | ||||||||||||||||
Balance at end of period | $ | 3,202 | $ | 21,217 | $ | 3,202 | $ | 21,217 | |||||||||||||
Debt Secured by Finance Receivables Measured at Fair Value: | |||||||||||||||||||||
Balance at beginning of period | $ | 5,392 | $ | 21,907 | $ | 13,117 | $ | 57,107 | |||||||||||||
Principal payments on debt at fair value | (2,363 | ) | (5,107 | ) | (10,917 | ) | (41,365 | ) | |||||||||||||
Premium accretion | 141 | 379 | 631 | 2,079 | |||||||||||||||||
Mark to fair value | – | (291 | ) | 339 | (933 | ) | |||||||||||||||
Balance at end of period | 3,170 | 16,888 | 3,170 | 16,888 | |||||||||||||||||
Reduction for payments collected and payable | (592 | ) | (570 | ) | (592 | ) | (570 | ) | |||||||||||||
Adjusted balance at end of period | $ | 2,578 | $ | 16,318 | $ | 2,578 | $ | 16,318 | |||||||||||||
The table below compares the fair values of the Fireside receivables and the related secured debt to their contractual balances for the periods shown: | |||||||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||||||
Contractual | Fair | Contractual | Fair | ||||||||||||||||||
Balance | Value | Balance | Value | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Fireside receivables portfolio | $ | 3,202 | $ | 3,202 | $ | 14,786 | $ | 14,476 | |||||||||||||
Debt secured by Fireside receivables portfolio | – | 3,170 | – | 13,117 | |||||||||||||||||
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 unaudited condensed consolidated balance sheet, is measured at fair value using level 2 assumptions based on our actual loss experience on sale of repossessed vehicles. At September 30, 2014, the finance receivables related to the repossessed vehicles in inventory totaled $31.3 million. We have applied a valuation adjustment, or loss allowance, of $19.2 million, which is based on a recovery rate of approximately 39%, resulting in an estimated fair value and carrying amount of $12.1 million. The fair value and carrying amount of the repossessed inventory at December 31, 2013 was $10.0 million after applying a valuation adjustment of $14.8 million. | |||||||||||||||||||||
There were no transfers in or out of level 1 or level 2 assets and liabilities for the three months and nine months ended September 30, 2014 and 2013. 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: | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||
Residual Interest in Securitizations: | |||||||||||||||||||||
Balance at beginning of period | $ | 260 | $ | 2,246 | $ | 854 | $ | 4,824 | |||||||||||||
Cash paid (received) during period | (209 | ) | (820 | ) | (1,039 | ) | (3,398 | ) | |||||||||||||
Included in earnings | 84 | – | 320 | – | |||||||||||||||||
Balance at end of period | $ | 135 | $ | 1,426 | $ | 135 | $ | 1,426 | |||||||||||||
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 | |||||||||||||||||||
September 30, | December 31, | Valuation | Unobservable | September 30, | December 31, | ||||||||||||||||
2014 | 2013 | Techniques | Inputs | 2014 | 2013 | ||||||||||||||||
(In thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Finance receivables measured at fair value | $ | 3,202 | $ | 14,476 | Discounted cash flows | Discount rate | 15.40% | 15.40% | |||||||||||||
Cumulative net losses | 5.00% | 5.00% | |||||||||||||||||||
Monthly average prepayments | 0.50% | 0.50% | |||||||||||||||||||
Residual interest in securitizations | 135 | 854 | Discounted cash flows | Discount rate | 20.00% | 20.00% | |||||||||||||||
Cumulative net losses | 15.00% | 15.00% | |||||||||||||||||||
Monthly average prepayments | 0.50% | 0.50% | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Debt secured by receivables measured at fair value | 3,170 | 13,117 | Discounted cash flows | Discount rate | 12.20% | 12.20% | |||||||||||||||
The estimated fair values of financial assets and liabilities at September 30, 2014 and December31, 2013, were as follows: | |||||||||||||||||||||
As of September 30, 2014 | |||||||||||||||||||||
Financial Instrument | (In thousands) | ||||||||||||||||||||
Carrying | Fair Value Measurements Using: | ||||||||||||||||||||
Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 13,136 | $ | 13,136 | $ | – | $ | – | $ | 13,136 | |||||||||||
Restricted cash and equivalents | 174,634 | 174,634 | – | – | 174,634 | ||||||||||||||||
Finance receivables, net | 1,407,809 | – | – | 1,394,872 | 1,394,872 | ||||||||||||||||
Finance receivables measured at fair value | 3,202 | – | – | 3,202 | 3,202 | ||||||||||||||||
Residual interest in securitizations | 135 | – | – | 135 | 135 | ||||||||||||||||
Accrued interest receivable | 21,600 | – | – | 21,600 | 21,600 | ||||||||||||||||
Liabilities: | |||||||||||||||||||||
Warehouse lines of credit | $ | 59,442 | $ | – | $ | – | $ | 59,442 | $ | 59,442 | |||||||||||
Accrued interest payable | 2,486 | – | – | 2,486 | 2,486 | ||||||||||||||||
Residual interest financing | 12,767 | – | – | 12,767 | 12,767 | ||||||||||||||||
Debt secured by receivables measured at fair value | |||||||||||||||||||||
3,170 | – | – | 3,170 | 3,170 | |||||||||||||||||
Securitization trust debt | 1,496,545 | – | – | 1,496,545 | 1,496,545 | ||||||||||||||||
Subordinated renewable notes | 15,493 | – | – | 15,493 | 15,493 | ||||||||||||||||
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, related party | 38,559 | – | – | 38,559 | 38,559 | ||||||||||||||||
Subordinated renewable notes | 19,142 | – | – | 19,142 | 19,142 | ||||||||||||||||
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 September 30, 2014 and December 31, 2013, 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. | |||||||||||||||||||||
Warehouse Lines of Credit, Residual Interest Financing, Senior Secured Debt, Related Party 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 reflect the current market rates. |
1_Summary_of_Significant_Accou1
1. Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Description of Business | ' | ||||||||||||||||
Description of Business | |||||||||||||||||
We were formed in California on March 8, 1991. We specialize in purchasing and servicing retail automobile installment sale contracts (“automobile contracts” or “finance receivables”) originated by licensed motor vehicle dealers located throughout the United States (“dealers”) in the sale of new and used automobiles, light trucks and passenger vans. Through our purchases, we provide indirect financing to dealer customers for borrowers with limited credit histories or past credit problems (“sub-prime customers”). We serve as an alternative source of financing for dealers, allowing sales to customers who otherwise might not be able to obtain financing. In addition to purchasing installment purchase contracts directly from dealers, we have also (i) acquired installment purchase contracts in four merger and acquisition transactions, (ii) purchased immaterial amounts of vehicle purchase money loans from non-affiliated lenders, and (iii) lent money directly to consumers for an immaterial amount of loans secured by vehicles. In this report, we refer to all of such contracts and loans as "automobile contracts." | |||||||||||||||||
Basis of Presentation | ' | ||||||||||||||||
Basis of Presentation | |||||||||||||||||
Our Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, with the instructions to Form 10-Q and with Article 10 of Regulation S-X of the Securities and Exchange Commission, and include all adjustments that are, in management’s opinion, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. Results for the nine-month period ended September 30, 2014 are not necessarily indicative of the operating results to be expected for the full year. | |||||||||||||||||
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these Unaudited Condensed Consolidated Financial Statements. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013. | |||||||||||||||||
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, valuing residual interest in securitizations, accreting net acquisition fees, amortizing deferred costs, valuing stock options and warrants issued, 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. | |||||||||||||||||
Other Income | ' | ||||||||||||||||
Other Income | |||||||||||||||||
The following table presents the primary components of Other Income for the three-month and nine-month periods ending September 30, 2014 and 2013: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Direct mail revenues | $ | 1,921 | $ | 1,691 | $ | 5,944 | $ | 5,418 | |||||||||
Convenience fee revenue | 840 | 720 | 2,450 | 2,235 | |||||||||||||
Recoveries on previously charged-off contracts | 39 | 49 | 121 | 153 | |||||||||||||
Sales tax refunds | 129 | – | 360 | 84 | |||||||||||||
Other | (22 | ) | 444 | (325 | ) | 394 | |||||||||||
Other income for the period | $ | 2,907 | $ | 2,904 | $ | 8,550 | $ | 8,284 | |||||||||
Stock-based Compensation | ' | ||||||||||||||||
Stock-based Compensation | |||||||||||||||||
We recognize compensation costs in the financial statements for all share-based payments based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. | |||||||||||||||||
For the nine months ended September 30, 2014 and 2013, we recorded stock-based compensation costs in the amount of $2.6 million and $2.9 million, respectively. As of September 30, 2014, unrecognized stock-based compensation costs to be recognized over future periods equaled $15.2 million. This amount will be recognized as expense over a weighted-average period of 3.2 years. | |||||||||||||||||
The following represents stock option activity for the nine months ended September 30, 2014: | |||||||||||||||||
Weighted | |||||||||||||||||
Number of | Weighted | Average | |||||||||||||||
Shares | Average | Remaining | |||||||||||||||
(in thousands) | Exercise Price | Contractual Term | |||||||||||||||
Options outstanding at the beginning of period | 10,128 | $ | 3.3 | N/A | |||||||||||||
Granted | 2,030 | 6.59 | N/A | ||||||||||||||
Exercised | (1,168 | ) | 2.06 | N/A | |||||||||||||
Forfeited | (103 | ) | 4.58 | N/A | |||||||||||||
Options outstanding at the end of period | 10,887 | $ | 4.04 | 6.24 years | |||||||||||||
Options exercisable at the end of period | 5,719 | $ | 2.53 | 5.09 years | |||||||||||||
At September 30, 2014, the aggregate intrinsic value of options outstanding and exercisable was $29.1 million and $23.0 million, respectively. There were 1,168,000 options exercised for the nine months ended September 30, 2014 compared to 1,116,000 for the comparable period in 2013. There were 2.1 million shares available for future stock option grants under existing plans as of September 30, 2014. The per share weighted-average fair value of stock options granted during the nine months ended September 30, 2014 was $2.73. | |||||||||||||||||
Purchases of Company Stock | ' | ||||||||||||||||
Purchases of Company Stock | |||||||||||||||||
During the nine-month period ended September 30, 2014 and 2013, we re-purchased 73,788 and 323,674 shares, respectively, of our common stock, at average prices of $7.91 and $7.68, respectively. All purchases were related to net exercises of outstanding options and warrants. In transactions during the nine-month period ended September 30, 2014, the holder of options and warrants to purchase 395,000 shares of our common stock paid the aggregate $583,000 exercise price by surrender to us of 73,788 of such 395,000 shares. There were no open market purchases of our common stock. | |||||||||||||||||
New Accounting Pronouncements | ' | ||||||||||||||||
New Accounting Pronouncements | |||||||||||||||||
In May 2014, the FASB issued an update (ASU No. 2014-09, Revenue from Contracts with Customers) creating FASB Topic 606, Revenue from Contracts with Customers. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides steps to follow to achieve the core principle. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements. | |||||||||||||||||
Reclassifications | ' | ||||||||||||||||
Reclassifications | |||||||||||||||||
Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or total shareholders’ equity. | |||||||||||||||||
Financial Covenants | ' | ||||||||||||||||
Financial Covenants | |||||||||||||||||
Certain of our securitization transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. As of September 30, 2014, we were in compliance with all such covenants. In addition, certain securitization and non-securitization related debt agreements contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. | |||||||||||||||||
Finance Receivables and Related Debt Measured at Fair Value | ' | ||||||||||||||||
Finance Receivables and Related Debt Measured at Fair Value | |||||||||||||||||
In September 2011 we purchased approximately $217.8 million of finance receivables from Fireside Bank. These receivables and the related acquisition debt are recorded on our balance sheet at fair value. There are no level 1 or level 2 inputs (as described by ASC 820) available to us for measurement of such receivables, or for the related debt. 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. 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. | |||||||||||||||||
Gain on Cancellation of Debt | ' | ||||||||||||||||
Gain on Cancellation of Debt | |||||||||||||||||
In April 2013, we repurchased the outstanding Class D notes issued by our first 2008 securitization trust, 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 held 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. We subsequently exercised our “clean-up call” option and repurchased the remaining collateral from the related securitization trust. The aggregate value of our consideration given 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 for the nine-month period ended September 30, 2013. | |||||||||||||||||
Provision for Contingent Liabilities | ' | ||||||||||||||||
Provision for Contingent Liabilities | |||||||||||||||||
We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Our legal counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that it is both probable that a liability has been incurred and the amount of the loss can be reasonably determined. | |||||||||||||||||
In June 2013, we recognized $9.7 million in contingent liability expenses to either record or increase the amounts we believed represented our best estimate of probable incurred losses related to various matters. The amount was allocated in part to a long running case (“Pardee”) in which we were sued for indemnity, and also to more recent matters. In September 2014 we reached a settlement, of the Pardee case, pursuant to which we paid $5.99 million and all claims against us were fully and finally discharged. | |||||||||||||||||
The more recent matters included two California class action suits where we are the defendant, and a governmental inquiry, in which the United States Federal Trade Commission (“FTC”) had informally proposed that we refrain from certain allegedly unfair trade practices, and make restitutionary payments into a consumer relief fund. In May 2014, the FTC announced its agreement to settle the matter by filing a lawsuit against us, and requesting, with our consent, that the court enter an agreed judgment against us. The lawsuit arose out of the FTC’s inquiry into our business practices. Under the agreed settlement, we made approximately $1.9 million of restitutionary payments and $1.6 million of account adjustments to our customers in September 2014, and paid a $2 million penalty to the federal government in June 2014, and implemented procedural changes, all pursuant to a consent decree which was entered by the court in June 2014. | |||||||||||||||||
We have recorded a liability as of September 30, 2014, which represents our best estimate of probable incurred losses for legal contingencies. The amount of losses that may ultimately be incurred cannot be estimated with certainty. |
1_Summary_of_Significant_Accou2
1. Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Other Income | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Direct mail revenues | $ | 1,921 | $ | 1,691 | $ | 5,944 | $ | 5,418 | |||||||||
Convenience fee revenue | 840 | 720 | 2,450 | 2,235 | |||||||||||||
Recoveries on previously charged-off contracts | 39 | 49 | 121 | 153 | |||||||||||||
Sales tax refunds | 129 | – | 360 | 84 | |||||||||||||
Other | (22 | ) | 444 | (325 | ) | 394 | |||||||||||
Other income for the period | $ | 2,907 | $ | 2,904 | $ | 8,550 | $ | 8,284 | |||||||||
Stock option activity | ' | ||||||||||||||||
Weighted | |||||||||||||||||
Number of | Weighted | Average | |||||||||||||||
Shares | Average | Remaining | |||||||||||||||
(in thousands) | Exercise Price | Contractual Term | |||||||||||||||
Options outstanding at the beginning of period | 10,128 | $ | 3.3 | N/A | |||||||||||||
Granted | 2,030 | 6.59 | N/A | ||||||||||||||
Exercised | (1,168 | ) | 2.06 | N/A | |||||||||||||
Forfeited | (103 | ) | 4.58 | N/A | |||||||||||||
Options outstanding at the end of period | 10,887 | $ | 4.04 | 6.24 years | |||||||||||||
Options exercisable at the end of period | 5,719 | $ | 2.53 | 5.09 years |
2_Finance_Receivables_Tables
2. Finance Receivables (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Finance Receivables | ' | ||||||||||||||||
Financial Receivables | ' | ||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Finance Receivables | (In thousands) | ||||||||||||||||
Automobile finance receivables, net of unearned interest | $ | 1,481,410 | $ | 1,182,950 | |||||||||||||
Less: Unearned acquisition fees and originations costs | (18,980 | ) | (27,887 | ) | |||||||||||||
Finance Receivables | $ | 1,462,430 | $ | 1,155,063 | |||||||||||||
Delinquency status of finance receivables | ' | ||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Deliquency Status | |||||||||||||||||
Current | $ | 1,412,427 | $ | 1,125,926 | |||||||||||||
31 - 60 days | 38,800 | 21,421 | |||||||||||||||
61 - 90 days | 17,398 | 24,663 | |||||||||||||||
91 + days | 12,785 | 10,940 | |||||||||||||||
$ | 1,481,410 | $ | 1,182,950 | ||||||||||||||
Allowance for credit losses | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 53,326 | $ | 32,101 | $ | 39,626 | $ | 19,594 | |||||||||
Provision for credit losses on finance receivables | 27,287 | 20,220 | 76,795 | 52,739 | |||||||||||||
Charge-offs | (29,988 | ) | (20,952 | ) | (80,514 | ) | (47,229 | ) | |||||||||
Recoveries | 3,996 | 3,095 | 18,714 | 9,360 | |||||||||||||
Balance at end of period | $ | 54,621 | $ | 34,464 | $ | 54,621 | $ | 34,464 | |||||||||
Allowance for losses on repossessed inventory | ' | ||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Gross balance of repossessions in inventory | $ | 31,276 | $ | 24,743 | |||||||||||||
Allowance for losses on repossessed inventory | (19,220 | ) | (14,779 | ) | |||||||||||||
Net repossessed inventory included in other assets | $ | 12,056 | $ | 9,964 |
3_Finance_Receivables_Measured1
3. Finance Receivables Measured at Fair Value (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Finance Receivables Measured At Fair Value | ' | ||||||||
Finance Receivables measured at fair value | ' | ||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Finance Receivables Measured at Fair Value | (In thousands) | ||||||||
Finance receivables and accrued interest, net of unearned interest | $ | 3,202 | $ | 14,786 | |||||
Less: Fair value adjustment | – | (310 | ) | ||||||
Finance receivables measured at fair value | $ | 3,202 | $ | 14,476 | |||||
Delinquency status of finance receivables measured at fair value | ' | ||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(In thousands) | |||||||||
Delinquency Status | |||||||||
Current | $ | 2,783 | $ | 13,421 | |||||
31 - 60 days | 295 | 878 | |||||||
61 - 90 days | 84 | 253 | |||||||
91 + days | 40 | 234 | |||||||
$ | 3,202 | $ | 14,786 |
4_Securitization_Trust_Debt_Ta
4. Securitization Trust Debt (Tables) | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||
Securitization Trust Debt | ' | ||||||||||||||||||||||
Securitization trust debt | ' | ||||||||||||||||||||||
Weighted | |||||||||||||||||||||||
Average | |||||||||||||||||||||||
Final | Receivables | Outstanding | Outstanding | Contractual | |||||||||||||||||||
Scheduled | Pledged at | Principal at | Principal at | Interest Rate at | |||||||||||||||||||
Payment | September 30, | Initial | September 30, | December 31, | September 30, | ||||||||||||||||||
Series | Date (1) | 2014 (2) | Principal | 2014 | 2013 | 2014 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Page Five Funding | Jan-18 | $ | 5,781 | $ | 46,058 | $ | 3,862 | $ | 9,358 | 9.28% | |||||||||||||
CPS 2011-A | Apr-18 | 15,687 | 104,546 | 11,665 | 24,526 | 2.86% | |||||||||||||||||
CPS 2011-B | Sep-18 | 27,632 | 111,046 | 27,235 | 44,433 | 4.53% | |||||||||||||||||
CPS 2011-C | Mar-19 | 35,992 | 119,400 | 35,773 | 56,271 | 4.92% | |||||||||||||||||
CPS 2012-A | Jun-19 | 42,577 | 155,000 | 41,703 | 65,051 | 3.44% | |||||||||||||||||
CPS 2012-B | Sep-19 | 58,409 | 141,500 | 57,490 | 86,254 | 3.14% | |||||||||||||||||
CPS 2012-C | Dec-19 | 64,289 | 147,000 | 63,376 | 93,006 | 2.48% | |||||||||||||||||
CPS 2012-D | Mar-20 | 77,951 | 160,000 | 77,234 | 108,815 | 2.14% | |||||||||||||||||
CPS 2013-A | Jun-20 | 110,393 | 185,000 | 109,937 | 142,842 | 2.00% | |||||||||||||||||
CPS 2013-B | Sep-20 | 133,324 | 205,000 | 131,358 | 172,499 | 2.45% | |||||||||||||||||
CPS 2013-C | Dec-20 | 150,069 | 205,000 | 147,671 | 191,504 | 2.64% | |||||||||||||||||
CPS 2013-D | Mar-21 | 148,167 | 183,000 | 144,868 | 183,000 | 2.36% | |||||||||||||||||
CPS 2014-A | Jun-21 | 159,479 | 180,000 | 155,381 | – | 1.98% | |||||||||||||||||
CPS 2014-B | Sep-21 | 192,600 | 202,500 | 189,117 | – | 1.82% | |||||||||||||||||
CPS 2014-C (3) | Dec-21 | 182,936 | 273,000 | 273,000 | – | 2.05% | |||||||||||||||||
$ | 1,405,286 | $ | 2,418,050 | $ | 1,469,670 | $ | 1,177,559 | ||||||||||||||||
____________ | |||||||||||||||||||||||
-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 $152.6 million in 2014, $559.0 million in 2015, $386.0 million in 2016, $225.3 million in 2017, $108.1 million in 2018 and $38.7 million in 2019. | ||||||||||||||||||||||
-2 | Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet. | ||||||||||||||||||||||
-3 | An additional $87.8 million of receivables were pledged to CPS 2014-C in October 2014. | ||||||||||||||||||||||
5_Debt_Tables
5. Debt (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||
Debt Outstanding | ' | ||||||||||||
Amount Outstanding at | |||||||||||||
September 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
(In thousands) | |||||||||||||
Description | Interest Rate | Maturity | |||||||||||
Warehouse lines of credit | 5.73% over one month Libor (Minimum 6.73%) | Mar-17 | $ | 27,545 | $ | 9,452 | |||||||
5.50% over one month Libor (Minimum 6.25%) | Aug-17 | 31,897 | – | ||||||||||
Residual interest financing | 11.75% over one month Libor | Apr-18 | 12,767 | 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 | 3,170 | 13,117 | |||||||||
Senior secured debt, related party | 13.00% | n/a | – | 37,128 | |||||||||
5.00% | n/a | – | 1,431 | ||||||||||
Subordinated renewable notes | Weighted average rate of 10.8% and 12.5% at September 30, 2014 and December 31, 2013, respectively | Weighted average maturity of May 2016 and July 2015 at September 30, 2014 and December 31, 2013, respectively | 15,493 | 19,142 | |||||||||
$ | 90,872 | $ | 99,366 | ||||||||||
6_Interest_Income_and_Interest1
6. Interest Income and Interest Expense (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Interest Income And Interest Expense Tables | ' | ||||||||||||||||
Interest income | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Interest on finance receivables | $ | 73,781 | $ | 60,462 | $ | 206,761 | $ | 167,416 | |||||||||
Residual interest income | 84 | – | 320 | – | |||||||||||||
Other interest income | – | – | 1 | 10 | |||||||||||||
Interest income | $ | 73,865 | $ | 60,462 | $ | 207,082 | $ | 167,426 | |||||||||
Interest expense | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Securitization trust debt | $ | 9,582 | $ | 8,357 | $ | 28,279 | $ | 25,725 | |||||||||
Warehouse lines of credit | 1,531 | 1,447 | 3,646 | 4,026 | |||||||||||||
Senior secured debt, related party | – | 1,599 | 1,651 | 6,474 | |||||||||||||
Debt secured by receivables at fair value | 150 | 623 | 683 | 3,435 | |||||||||||||
Residual interest financing | 462 | 1,079 | 1,545 | 2,666 | |||||||||||||
Subordinated renewable notes | 514 | 748 | 1,758 | 2,474 | |||||||||||||
Interest expense | $ | 12,239 | $ | 13,853 | $ | 37,562 | $ | 44,800 |
7_Earnings_Per_Share_Tables
7. Earnings Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Income per share: | ' | ||||||||||||||||
Computation of basic and diluted earnings per share | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Weighted average number of common shares outstanding during the period used to compute basic earnings per share | 25,290 | 21,795 | 24,895 | 20,959 | |||||||||||||
Incremental common shares attributable to exercise of outstanding options and warrants | 6,750 | 9,422 | 7,126 | 10,591 | |||||||||||||
Weighted average number of common shares used to compute diluted earnings per share | 32,040 | 31,217 | 32,021 | 31,550 |
10_Employee_Benefits_Tables
10. Employee Benefits (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Employee Benefits | ' | ||||||||||||||||
Net periodic cost (benefit) | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Components of net periodic cost (benefit) | |||||||||||||||||
Service cost | $ | – | $ | – | $ | – | $ | – | |||||||||
Interest cost | 220 | 210 | 660 | 630 | |||||||||||||
Expected return on assets | (432 | ) | (335 | ) | (1,296 | ) | (1,005 | ) | |||||||||
Amortization of transition (asset)/obligation | – | – | – | – | |||||||||||||
Amortization of net (gain) / loss | – | 117 | – | 351 | |||||||||||||
Net periodic cost (benefit) | $ | (212 | ) | $ | (8 | ) | $ | (636 | ) | $ | (24 | ) |
11_Fair_Value_Measurements_Tab
11. Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||
Reconciliation of the acquired finance receivables and related debt measured at fair value on a recurring basis | ' | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||
Finance Receivables Measured at Fair Value: | |||||||||||||||||||||
Balance at beginning of period | $ | 5,686 | $ | 30,319 | $ | 14,476 | $ | 59,668 | |||||||||||||
Payments on finance receivables at fair value | (3,057 | ) | (8,848 | ) | (10,930 | ) | (36,828 | ) | |||||||||||||
Charge-offs on finance receivables at fair value | (184 | ) | (535 | ) | (740 | ) | (2,275 | ) | |||||||||||||
Discount accretion | 722 | 263 | 353 | 1,247 | |||||||||||||||||
Mark to fair value | 35 | 18 | 43 | (595 | ) | ||||||||||||||||
Balance at end of period | $ | 3,202 | $ | 21,217 | $ | 3,202 | $ | 21,217 | |||||||||||||
Debt Secured by Finance Receivables Measured at Fair Value: | |||||||||||||||||||||
Balance at beginning of period | $ | 5,392 | $ | 21,907 | $ | 13,117 | $ | 57,107 | |||||||||||||
Principal payments on debt at fair value | (2,363 | ) | (5,107 | ) | (10,917 | ) | (41,365 | ) | |||||||||||||
Premium accretion | 141 | 379 | 631 | 2,079 | |||||||||||||||||
Mark to fair value | – | (291 | ) | 339 | (933 | ) | |||||||||||||||
Balance at end of period | 3,170 | 16,888 | 3,170 | 16,888 | |||||||||||||||||
Reduction for payments collected and payable | (592 | ) | (570 | ) | (592 | ) | (570 | ) | |||||||||||||
Adjusted balance at end of period | $ | 2,578 | $ | 16,318 | $ | 2,578 | $ | 16,318 | |||||||||||||
Comparision of fair values of the Fireside receivables and the related secured debt | ' | ||||||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||||||
Contractual | Fair | Contractual | Fair | ||||||||||||||||||
Balance | Value | Balance | Value | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Fireside receivables portfolio | $ | 3,202 | $ | 3,202 | $ | 14,786 | $ | 14,476 | |||||||||||||
Debt secured by Fireside receivables portfolio | – | 3,170 | – | 13,117 | |||||||||||||||||
Reconciliation for level 3 assets | ' | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||
Residual Interest in Securitizations: | |||||||||||||||||||||
Balance at beginning of period | $ | 260 | $ | 2,246 | $ | 854 | $ | 4,824 | |||||||||||||
Cash paid (received) during period | (209 | ) | (820 | ) | (1,039 | ) | (3,398 | ) | |||||||||||||
Included in earnings | 84 | – | 320 | – | |||||||||||||||||
Balance at end of period | $ | 135 | $ | 1,426 | $ | 135 | $ | 1,426 | |||||||||||||
Qualitative information about level 3 fair value measurements | ' | ||||||||||||||||||||
Financial Instrument | Fair Values as of | Inputs as of | |||||||||||||||||||
September 30, | December 31, | Valuation | Unobservable | September 30, | December 31, | ||||||||||||||||
2014 | 2013 | Techniques | Inputs | 2014 | 2013 | ||||||||||||||||
(In thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Finance receivables measured at fair value | $ | 3,202 | $ | 14,476 | Discounted cash flows | Discount rate | 15.40% | 15.40% | |||||||||||||
Cumulative net losses | 5.00% | 5.00% | |||||||||||||||||||
Monthly average prepayments | 0.50% | 0.50% | |||||||||||||||||||
Residual interest in securitizations | 135 | 854 | Discounted cash flows | Discount rate | 20.00% | 20.00% | |||||||||||||||
Cumulative net losses | 15.00% | 15.00% | |||||||||||||||||||
Monthly average prepayments | 0.50% | 0.50% | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Debt secured by receivables measured at fair value | 3,170 | 13,117 | Discounted cash flows | Discount rate | 12.20% | 12.20% | |||||||||||||||
Estimated fair values of financial assets and liabilities | ' | ||||||||||||||||||||
As of September 30, 2014 | |||||||||||||||||||||
Financial Instrument | (In thousands) | ||||||||||||||||||||
Carrying | Fair Value Measurements Using: | ||||||||||||||||||||
Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 13,136 | $ | 13,136 | $ | – | $ | – | $ | 13,136 | |||||||||||
Restricted cash and equivalents | 174,634 | 174,634 | – | – | 174,634 | ||||||||||||||||
Finance receivables, net | 1,407,809 | – | – | 1,394,872 | 1,394,872 | ||||||||||||||||
Finance receivables measured at fair value | 3,202 | – | – | 3,202 | 3,202 | ||||||||||||||||
Residual interest in securitizations | 135 | – | – | 135 | 135 | ||||||||||||||||
Accrued interest receivable | 21,600 | – | – | 21,600 | 21,600 | ||||||||||||||||
Liabilities: | |||||||||||||||||||||
Warehouse lines of credit | $ | 59,442 | $ | – | $ | – | $ | 59,442 | $ | 59,442 | |||||||||||
Accrued interest payable | 2,486 | – | – | 2,486 | 2,486 | ||||||||||||||||
Residual interest financing | 12,767 | – | – | 12,767 | 12,767 | ||||||||||||||||
Debt secured by receivables measured at fair value | |||||||||||||||||||||
3,170 | – | – | 3,170 | 3,170 | |||||||||||||||||
Securitization trust debt | 1,496,545 | – | – | 1,496,545 | 1,496,545 | ||||||||||||||||
Subordinated renewable notes | 15,493 | – | – | 15,493 | 15,493 | ||||||||||||||||
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, related party | 38,559 | – | – | 38,559 | 38,559 | ||||||||||||||||
Subordinated renewable notes | 19,142 | – | – | 19,142 | 19,142 | ||||||||||||||||
1_Summary_of_Significant_Accou3
1. Summary of Significant Accounting Policies - Schedule of Other Income (Details-Other Income) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Primary components of Other Income | ' | ' | ' | ' |
Other income for the period | $2,907 | $2,904 | $8,550 | $8,284 |
Direct Mail Revenues | ' | ' | ' | ' |
Primary components of Other Income | ' | ' | ' | ' |
Other income for the period | 1,921 | 1,691 | 5,944 | 5,418 |
Convenience Fee Revenue | ' | ' | ' | ' |
Primary components of Other Income | ' | ' | ' | ' |
Other income for the period | 840 | 720 | 2,450 | 2,235 |
Recoveries on previously charged-off contracts | ' | ' | ' | ' |
Primary components of Other Income | ' | ' | ' | ' |
Other income for the period | 39 | 49 | 121 | 153 |
Sales Tax Refunds | ' | ' | ' | ' |
Primary components of Other Income | ' | ' | ' | ' |
Other income for the period | 129 | 0 | 360 | 84 |
Other Income | ' | ' | ' | ' |
Primary components of Other Income | ' | ' | ' | ' |
Other income for the period | ($22) | $444 | ($325) | $394 |
1_Summary_of_Significant_Accou4
1. Summary of Significant Accounting Policies (Details-Options outstanding) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Number of Shares | ' | ' |
Outstanding options, beginning balance | 10,128,000 | ' |
Granted | 2,030,000 | ' |
Exercised | -1,168,000 | -1,116,000 |
Forfeited | -103,000 | ' |
Outstanding options, ending balance | 10,887,000 | ' |
Options exercisable | 5,719,000 | ' |
Weighted Average Exercise Price | ' | ' |
Outstanding options, beginning balance | $3.30 | ' |
Granted | $6.59 | ' |
Exercised | $2.06 | ' |
Forfeited | $4.58 | ' |
Outstanding options, ending balance | $4.04 | ' |
Options exercisable | $2.53 | ' |
Weighted Average Remaining Contractual Term | ' | ' |
Outstanding options, ending balance | '6 years 2 months 26 days | ' |
Options exercisable | '5 years 1 month 2 days | ' |
1_Summary_of_Significant_Accou5
1. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Stock based compensation costs | ' | ' | $2,578 | $2,939 |
Unrecognized stock-based compensation costs | 15,200 | ' | 15,200 | ' |
Unrecognized stock-based compensation costs amortization period | ' | ' | '3 years 2 months 12 days | ' |
Aggregate intrinsic value outstanding | 29,100 | ' | 29,100 | ' |
Aggregate intrinsic value exercisable | 23,000 | ' | 23,000 | ' |
Options Exercised | ' | ' | 1,168,000 | 1,116,000 |
Shares available for future grants | 2,100,000 | ' | 2,100,000 | ' |
Per share weighted average fair value of stock options granted | ' | ' | $2.73 | ' |
Repurchase of common stock, shares repurchased | ' | ' | 73,778 | 323,674 |
Repurchase of common stock average share price | ' | ' | $7.91 | $7.68 |
Gain on cancellation of debt | $0 | $0 | $0 | $10,947 |
2_Finance_Receivables_DetailsF
2. Finance Receivables (Details-Finance receivables) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Finance Receivables | ' | ' |
Automobile finance receivables, net of unearned interest | $1,481,410 | $1,182,950 |
Less: Unearned acquisition fees and discounts | -18,980 | -27,887 |
Finance Receivables | $1,462,430 | $1,155,063 |
2_Finance_Receivables_DetailsD
2. Finance Receivables (Details-Delinquency status) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deliquency Status | ' | ' |
Current | $1,412,427 | $1,125,926 |
31 - 60 days | 38,800 | 21,421 |
61 - 90 days | 17,398 | 24,663 |
91 + days | 12,785 | 10,940 |
Finance receivables | $1,481,410 | $1,182,950 |
2_Finance_Receivables_DetailsA
2. Finance Receivables (Details-Allowance for finance credit losses) (USD $) | 3 Months Ended | 9 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Finance Receivables | ' | ' | ' | ' | ' | ' |
Balance at beginning of period | $53,326 | $32,101 | $39,626 | $19,594 | $44,652 | $24,881 |
Provision for credit losses on finance receivables | 27,287 | 20,220 | 76,795 | 52,739 | ' | ' |
Charge-offs | -29,988 | -20,952 | -80,514 | -47,229 | ' | ' |
Recoveries | 3,996 | 3,095 | 18,714 | 9,360 | ' | ' |
Balance at end of period | $54,621 | $34,464 | $54,621 | $34,464 | $44,652 | $24,881 |
2_Finance_Receivables_DetailsR
2. Finance Receivables (Details-Repossessions) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Finance Receivables | ' | ' |
Gross balance of repossessions in inventory | $31,276 | $24,743 |
Allowance for losses on repossessed inventory | -19,220 | -14,779 |
Net repossessed inventory included in other assets | $12,056 | $9,964 |
2_Finance_Receivables_Details_
2. Finance Receivables (Details Narrative) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Finance Receivables | ' | ' |
Finance receivables | $12,800 | $10,900 |
3_Finance_Receivables_Measured2
3. Finance Receivables Measured at Fair Value (Details-Finance receivables) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Finance Receivables Measured At Fair Value | ' | ' |
Finance receivables and accrued interest, net of unearned interest | $3,202 | $14,786 |
Less: Fair value adjustment | 0 | -310 |
Finance receivables measured at fair value | $3,202 | $14,476 |
3_Finance_Receivables_Measured3
3. Finance Receivables Measured at Fair Value (Details-Delinquency status) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Total finance receivables measured at fair value | $3,202 | $14,786 |
Current | ' | ' |
Total finance receivables measured at fair value | 2,783 | 13,421 |
31-60 days | ' | ' |
Total finance receivables measured at fair value | 295 | 878 |
61-90 days | ' | ' |
Total finance receivables measured at fair value | 84 | 253 |
91+ days | ' | ' |
Total finance receivables measured at fair value | $40 | $234 |
4_Securitization_Trust_Debt_De
4. Securitization Trust Debt (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
"Securitization trust debt," and components of debt | ' | ' |
Receivables Pledged at end of period | $1,405,286 | ' |
Initial Principal | 2,418,050 | ' |
Outstanding Principal | 1,469,670 | 1,177,559 |
Page Five Funding [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'January 2018 | ' |
Receivables Pledged at end of period | 5,781 | ' |
Initial Principal | 46,058 | ' |
Outstanding Principal | 3,862 | 9,358 |
Weighted Average Contractual Interest Rate end of period | 9.28% | ' |
CPS 2011-A [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'April 2018 | ' |
Receivables Pledged at end of period | 15,687 | ' |
Initial Principal | 104,546 | ' |
Outstanding Principal | 11,665 | 24,526 |
Weighted Average Contractual Interest Rate end of period | 2.86% | ' |
CPS 2011-B [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'September 2018 | ' |
Receivables Pledged at end of period | 27,632 | ' |
Initial Principal | 111,046 | ' |
Outstanding Principal | 27,235 | 44,433 |
Weighted Average Contractual Interest Rate end of period | 4.53% | ' |
CPS 2011-C [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'March 2019 | ' |
Receivables Pledged at end of period | 35,992 | ' |
Initial Principal | 119,400 | ' |
Outstanding Principal | 35,773 | 56,271 |
Weighted Average Contractual Interest Rate end of period | 4.92% | ' |
CPS 2012-A [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'June 2019 | ' |
Receivables Pledged at end of period | 42,577 | ' |
Initial Principal | 155,000 | ' |
Outstanding Principal | 41,703 | 65,051 |
Weighted Average Contractual Interest Rate end of period | 3.44% | ' |
CPS 2012-B [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'September 2019 | ' |
Receivables Pledged at end of period | 58,409 | ' |
Initial Principal | 141,500 | ' |
Outstanding Principal | 57,490 | 86,254 |
Weighted Average Contractual Interest Rate end of period | 3.14% | ' |
CPS 2012-C [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'December 2019 | ' |
Receivables Pledged at end of period | 64,289 | ' |
Initial Principal | 147,000 | ' |
Outstanding Principal | 63,376 | 93,006 |
Weighted Average Contractual Interest Rate end of period | 2.48% | ' |
CPS 2012-D [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'March 2020 | ' |
Receivables Pledged at end of period | 77,951 | ' |
Initial Principal | 160,000 | ' |
Outstanding Principal | 77,234 | 108,815 |
Weighted Average Contractual Interest Rate end of period | 2.14% | ' |
CPS 2013-A [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'June 2020 | ' |
Receivables Pledged at end of period | 110,393 | ' |
Initial Principal | 185,000 | ' |
Outstanding Principal | 109,937 | 142,842 |
Weighted Average Contractual Interest Rate end of period | 2.00% | ' |
CPS 2013-B [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'September 2020 | ' |
Receivables Pledged at end of period | 133,324 | ' |
Initial Principal | 205,000 | ' |
Outstanding Principal | 131,358 | 172,499 |
Weighted Average Contractual Interest Rate end of period | 2.45% | ' |
CPS 2013-C [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'December 2020 | ' |
Receivables Pledged at end of period | 150,069 | ' |
Initial Principal | 205,000 | ' |
Outstanding Principal | 147,671 | 191,504 |
Weighted Average Contractual Interest Rate end of period | 2.64% | ' |
CPS 2013-D [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'March 2021 | ' |
Receivables Pledged at end of period | 148,167 | ' |
Initial Principal | 183,000 | ' |
Outstanding Principal | 144,868 | 183,000 |
Weighted Average Contractual Interest Rate end of period | 2.36% | ' |
CPS 2014-A [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'June 2021 | ' |
Receivables Pledged at end of period | 159,479 | ' |
Initial Principal | 180,000 | ' |
Outstanding Principal | 155,381 | 0 |
Weighted Average Contractual Interest Rate end of period | 1.98% | ' |
CPS 2014-B [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'September 2021 | ' |
Receivables Pledged at end of period | 192,600 | ' |
Initial Principal | 202,500 | ' |
Outstanding Principal | 189,117 | 0 |
Weighted Average Contractual Interest Rate end of period | 1.82% | ' |
CPS 2014-C [Member] | ' | ' |
"Securitization trust debt," and components of debt | ' | ' |
Final Scheduled Payment Date | 'December 2021 | ' |
Receivables Pledged at end of period | 182,936 | ' |
Initial Principal | 273,000 | ' |
Outstanding Principal | $273,000 | $0 |
Weighted Average Contractual Interest Rate end of period | 2.05% | ' |
4_Securitization_Trust_Debt_De1
4. Securitization Trust Debt (Details Narrative) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Securitization Trust Debt | ' |
Restricted Cash for securitization trust debt | $174,600 |
Pre-funding proceeds | 87,800 |
Expected debt payments 2014 | 152,600 |
Expected debt payments 2015 | 559,000 |
Expected debt payments 2016 | 386,000 |
Expected debt payments 2017 | 225,300 |
Expected debt payments 2018 | 108,100 |
Expected debt payments 2019 | 38,700 |
Receivables pledged | $87,800 |
5_Debt_Details
5. Debt (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | $90,872 | $99,366 |
Warehouse lines of credit | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 27,545 | 9,452 |
Interest rate | '5.73% over one month Libor (Minimum 6.73%) | ' |
Maturity date | 'March 2017 | ' |
Warehouse lines of credit (2) | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 31,897 | 0 |
Interest rate | '5.50% over one month Libor (Minimum 6.25%) | ' |
Maturity date | 'August 2017 | ' |
Residual interest financing | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 12,767 | 19,096 |
Interest rate | '11.75% over one month Libor | ' |
Maturity date | 'April 2018 | ' |
Debt secured by receivables measured at fair value | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 3,170 | 13,117 |
Interest rate | 'n/a | ' |
Maturity date | 'Repayment is based on payments from underlying receivables.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 | 0 | 37,128 |
Interest rate | '13.00% | ' |
Maturity date | 'n/a | ' |
Senior Secured Debt Related Party (2) | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | 0 | 1,431 |
Interest rate | '5.00% | ' |
Maturity date | 'n/a | ' |
Subordinated renewable notes | ' | ' |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ' | ' |
Other debt outstanding | $15,493 | $19,142 |
Interest rate | 'Weighted average rate of 10.8% and 12.5% at September 30, 2014 and December 31, 2013, respectively | ' |
Maturity date | 'Weighted average maturity of May 2016 and July 2015 at September 30, 2014 and December 31, 2013, respectively | ' |
5_Debt_Details_Narrative
5. Debt (Details Narrative) (Secured Debt [Member], USD $) | 1 Months Ended | 3 Months Ended |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Mar. 31, 2014 |
Secured Debt [Member] | ' | ' |
Senior secured debt paid to related party | $10,000 | $28,400 |
6_Interest_Income_Details
6. Interest Income (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Components of interest income | ' | ' | ' | ' |
Interest on Finance Receivables | $73,781 | $60,462 | $206,761 | $167,416 |
Residual interest income | 84 | 0 | 320 | 0 |
Other interest income | 0 | 0 | 1 | 10 |
Interest income | $73,865 | $60,462 | $207,082 | $167,426 |
6_Interest_Expense_Details
6. Interest Expense (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Interest Expense Details | ' | ' | ' | ' |
Securitization trust debt | $9,582 | $8,357 | $28,279 | $25,725 |
Warehouse lines of credit | 1,531 | 1,447 | 3,646 | 4,026 |
Senior secured debt, related party | 0 | 1,599 | 1,651 | 6,474 |
Debt secured by receivables at fair value | 150 | 623 | 683 | 3,435 |
Residual interest financing | 462 | 1,079 | 1,545 | 2,666 |
Subordinated renewable notes | 514 | 748 | 1,758 | 2,474 |
Total interest expense | $12,239 | $13,853 | $37,562 | $44,800 |
7_Earnings_Per_Share_Details
7. Earnings Per Share (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income per share: | ' | ' | ' | ' |
Weighted average common shares - basic | 25,290,000 | 21,795,000 | 24,895,000 | 20,959,000 |
Incremental common shares attibutable to exercise of outstanding options and warrants | 6,750,000 | 9,422,000 | 7,126,000 | 10,591,000 |
Weighted average common shares - diluted | 32,040,000 | 31,217,000 | 32,021,000 | 31,550,000 |
7_Earnings_Per_Share_Details_N
7. Earnings Per Share (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income per share: | ' | ' | ' | ' |
Antidilutive common stock equivalents | 4,000,000 | 3,100,000 | 3,100,000 | 1,900,000 |
8_Income_Taxes_Details_Narrati
8. Income Taxes (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' | ' |
Unrecognized tax benefits | $0 | ' | $0 | ' | $0 |
Deferred tax asset | 46,600 | ' | 46,600 | ' | ' |
U.S. federal deferred tax assets | 35,200 | ' | 35,200 | ' | ' |
State deferred tax assets | 11,400 | ' | 11,400 | ' | ' |
Net operating loss carryforward | 120,000 | ' | 120,000 | ' | ' |
Income tax expense | $6,000 | $4,700 | $16,400 | $11,200 | ' |
Effective income tax rate | 44.00% | 44.00% | 43.00% | 43.00% | ' |
9_Legal_Proceedings_Details_Na
9. Legal Proceedings (Details Narrative) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Provision for legal proceedings and contingencies | '$0 to $1.3 million |
Pardee [Member] | ' |
Payments on litigation | 5,990 |
FTC [Member] | Restitutionary Payments [Member] | ' |
Payments on litigation | 1,900 |
FTC [Member] | Account Adjustments [Member] | ' |
Payments on litigation | 1,600 |
FTC [Member] | Penalty [Member] | ' |
Payments on litigation | 2,000 |
10_Employee_Benefits_Details
10. Employee Benefits (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Components of net periodic cost (benefit) | ' | ' | ' | ' |
Service cost | $0 | $0 | $0 | $0 |
Interest cost | 220 | 210 | 660 | 630 |
Expected return on assets | -432 | -335 | -1,296 | -1,005 |
Amortization of transition (asset)/obligation | 0 | 0 | 0 | 0 |
Amortization of net (gain)/loss | 0 | 117 | 0 | 351 |
Net periodic cost (benefit) | ($212) | ($8) | ($636) | ($24) |
10_Employee_Benefits_Details_N
10. Employee Benefits (Details Narrative) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Employee Benefits | ' |
Plan contribution | $237 |
Future plan contribution | $0 |
11_Fair_Value_measurements_Det
11. Fair Value measurements (Details-Finance receivables) (USD $) | 3 Months Ended | 9 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Finance Receivables Measured at Fair Value: | ' | ' | ' | ' | ' | ' |
Balance at beginning of period | $5,686 | $30,319 | $14,476 | $59,668 | $9,058 | $43,021 |
Payments on finance receivables at fair value | -3,057 | -8,848 | -10,930 | -36,828 | ' | ' |
Charge-offs on finance receivables at fair value | -184 | -535 | -740 | -2,275 | ' | ' |
Discount accretion | 722 | 263 | 353 | 1,247 | ' | ' |
Mark to fair value | 35 | 18 | 43 | -595 | ' | ' |
Balance at end of period | 3,202 | 21,217 | 3,202 | 21,217 | 9,058 | 43,021 |
Balance at beginning of period | 5,392 | 21,907 | 13,117 | 57,107 | 8,576 | 40,387 |
Principal payments on debt at fair value | -2,363 | -5,107 | -10,917 | -41,365 | ' | ' |
Premium accretion | 141 | 379 | 631 | 2,079 | ' | ' |
Mark to fair value | 0 | -291 | 339 | -933 | ' | ' |
Balance at end of period | 3,170 | 16,888 | 3,170 | 16,888 | 8,576 | 40,387 |
Reduction for principal payments collected and payable | -592 | -570 | -592 | -570 | ' | ' |
Adjusted balance at end of period | $2,578 | $16,318 | $2,578 | $16,318 | ' | ' |
11_Fair_Value_measurements_Det1
11. Fair Value measurements (Details-Fireside receivables) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
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 | $3,202 | $14,786 |
Debt secured by Fireside receivables portfolio | 0 | 0 |
Fair Value [Member] | ' | ' |
Fair values of the Fireside receivables and the related secured debt to their contractual balances | ' | ' |
Fireside receivables portfolio | 3,202 | 14,476 |
Debt secured by Fireside receivables portfolio | $3,170 | $13,117 |
11_Fair_Value_measurements_Det2
11. Fair Value measurements (Details-Residual interest) (USD $) | 3 Months Ended | 9 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Residual Interest in Securitizations: | ' | ' | ' | ' | ' | ' |
Balance at beginning of period | $260 | $2,246 | $854 | $4,824 | $445 | $3,505 |
Cash paid (received) during period | -209 | -820 | -1,039 | -3,398 | ' | ' |
Included in earnings | 84 | 0 | 320 | 0 | ' | ' |
Balance at end of period | $135 | $1,426 | $135 | $1,426 | $445 | $3,505 |
Recovered_Sheet1
11. Fair Value Measurements (Details-Level 3 fair value measurements) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Finance receivables | Finance receivables | Residual interest in securitizations | Residual interest in securitizations | DebtSecuredReceivablesMember | Debt secured by receivables measured at fair value | ||||||||
Finance receivables measured at fair value | $3,202 | $5,686 | $9,058 | $14,476 | $21,217 | $30,319 | $43,021 | $59,668 | $3,202 | $14,476 | ' | ' | ' | ' |
Residual interest in securitizations | 135 | ' | ' | 854 | ' | ' | ' | ' | ' | ' | 135 | 854 | ' | ' |
Debt secured by receivables measured at fair value | $3,170 | ' | ' | $13,117 | ' | ' | ' | ' | ' | ' | ' | ' | $3,170 | $13,117 |
Valuation Techniques and Unobservable Inputs | ' | ' | ' | ' | ' | ' | ' | ' | 'Discounted cash flows; Discount rate 15.4%, Cumulative net losses 5.0%, Monthly average prepayments 0.5% | 'Discounted cash flows; Discount rate 15.4%, Cumulative net losses 5.0%, Monthly average prepayments 0.5% | 'Discounted cash flows; Discount rate 20.0%, Cumulative net losses 15.0%, Monthly average prepayments 0.5% | 'Discounted cash flows; Discount rate 20.0%, Cumulative net losses 15.0%, Monthly average prepayments 0.5% | 'Discounted cash flows,B Discount rate 12.2% | 'Discounted cash flows,B Discount rate 12.2% |
11_Fair_Value_measurements_Det3
11. Fair Value measurements (Details-fair values) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||||||||
Assets: | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | $13,136 | ' | ' | $22,112 | ' | ' | ' | ' |
Restricted cash and equivalents | 174,634 | ' | ' | 132,284 | ' | ' | ' | ' |
Finance receivables, net | 1,394,872 | ' | ' | 1,100,153 | ' | ' | ' | ' |
Finance receivables measured at fair value | 3,202 | 5,686 | 9,058 | 14,476 | 21,217 | 30,319 | 43,021 | 59,668 |
Residual interest in securitizations | 135 | ' | ' | 854 | ' | ' | ' | ' |
Accrued interest receivable | 21,600 | ' | ' | 18,670 | ' | ' | ' | ' |
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' |
Warehouse lines of credit | 59,442 | ' | ' | 9,452 | ' | ' | ' | ' |
Accrued interest payable | 2,486 | ' | ' | 2,908 | ' | ' | ' | ' |
Residual interest financing | 12,767 | ' | ' | 19,096 | ' | ' | ' | ' |
Debt secured by receivables measured at fair value | 3,170 | ' | ' | 13,117 | ' | ' | ' | ' |
Securitization trust debt | 1,496,545 | ' | ' | 1,189,086 | ' | ' | ' | ' |
Senior secured debt, related party | ' | ' | ' | 38,559 | ' | ' | ' | ' |
Subordinated renewable notes | 15,493 | ' | ' | 19,142 | ' | ' | ' | ' |
Carrying Value [Member] | ' | ' | ' | ' | ' | ' | ' | ' |
Assets: | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | 13,136 | ' | ' | 22,112 | ' | ' | ' | ' |
Restricted cash and equivalents | 174,634 | ' | ' | 132,284 | ' | ' | ' | ' |
Finance receivables, net | 1,407,809 | ' | ' | 1,115,437 | ' | ' | ' | ' |
Finance receivables measured at fair value | 3,202 | ' | ' | 14,476 | ' | ' | ' | ' |
Residual interest in securitizations | 135 | ' | ' | 854 | ' | ' | ' | ' |
Accrued interest receivable | 21,600 | ' | ' | 18,670 | ' | ' | ' | ' |
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' |
Warehouse lines of credit | 59,442 | ' | ' | 9,452 | ' | ' | ' | ' |
Accrued interest payable | 2,486 | ' | ' | 2,908 | ' | ' | ' | ' |
Residual interest financing | 12,767 | ' | ' | 19,096 | ' | ' | ' | ' |
Debt secured by receivables measured at fair value | 3,170 | ' | ' | 13,117 | ' | ' | ' | ' |
Securitization trust debt | 1,496,545 | ' | ' | 1,177,559 | ' | ' | ' | ' |
Senior secured debt, related party | ' | ' | ' | 38,559 | ' | ' | ' | ' |
Subordinated renewable notes | 15,493 | ' | ' | 19,142 | ' | ' | ' | ' |
Fair Value Inputs Level 1 [Member] | ' | ' | ' | ' | ' | ' | ' | ' |
Assets: | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | 13,136 | ' | ' | 22,112 | ' | ' | ' | ' |
Restricted cash and equivalents | 174,634 | ' | ' | 132,284 | ' | ' | ' | ' |
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, related party | ' | ' | ' | 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, related party | ' | ' | ' | 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 | 1,394,872 | ' | ' | 1,100,153 | ' | ' | ' | ' |
Finance receivables measured at fair value | 3,202 | ' | ' | 14,476 | ' | ' | ' | ' |
Residual interest in securitizations | 135 | ' | ' | 854 | ' | ' | ' | ' |
Accrued interest receivable | 21,600 | ' | ' | 18,670 | ' | ' | ' | ' |
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' |
Warehouse lines of credit | 59,442 | ' | ' | 9,452 | ' | ' | ' | ' |
Accrued interest payable | 2,486 | ' | ' | 2,908 | ' | ' | ' | ' |
Residual interest financing | 12,767 | ' | ' | 19,096 | ' | ' | ' | ' |
Debt secured by receivables measured at fair value | 3,170 | ' | ' | 13,117 | ' | ' | ' | ' |
Securitization trust debt | 1,496,545 | ' | ' | 1,189,086 | ' | ' | ' | ' |
Senior secured debt, related party | ' | ' | ' | 38,559 | ' | ' | ' | ' |
Subordinated renewable notes | $15,493 | ' | ' | $19,142 | ' | ' | ' | ' |