EXHIBIT 99.1
 | NEWS RELEASE |
CONSUMER PORTFOLIO SERVICES, INC. REPORTS
2007 THIRD QUARTER EARNINGS
IRVINE, California, October 17, 2007 (BUSINESS WIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings for its third quarter ended September 30, 2007.
Pretax income for the third quarter of 2007 increased to $6.3 million, compared to pretax income of $4.3 million for the comparable quarter ended September 30, 2006. Net income for the quarter ended September 30, 2007 was $3.7 million, or $0.16 per diluted share, compared to net income of $4.3 million, or $0.18 per diluted share, for the quarter ended September 30, 2006. Net income for the third quarter of 2006 did not include a provision for income tax expense.
For the three months ended September 30, 2007 total revenues increased approximately $29.0 million, or 39.4%, to $102.8 million, compared to $73.7 million for the three months ended September 30, 2006. Total operating expenses for the three months ended September 30, 2007 were $96.4 million, an increase of $27.0 million, or 38.8%, as compared to $69.4 million for the three months ended September 30, 2006.
Pretax income for the nine months ended September 30, 2007 increased to $18.0 million, compared to pretax income of $8.7 million for the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2007 was $10.4 million, or $0.45 per diluted share, compared to net income of $8.7 million, or $0.36 per diluted share, for the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2006 did not include a provision for income tax expense.
For the nine months ended September 30, 2007 total revenues increased approximately $86.1 million, or 43.3%, to $285.0 million, compared to $199.0 million for the nine months ended September 30, 2006. Total operating expenses for the nine months ended September 30, 2007 were $267.1 million, an increase of $76.8 million, or 40.3%, as compared to $190.3 million for the nine months ended September 30, 2006.
During the third quarter of 2007, CPS purchased $340.2 million of contracts from dealers as compared to $346.0 million during the second quarter of 2007 and $254.4 million during the third quarter of 2006. During the first three quarters of 2007, CPS purchased $1,016.5 million of contracts from dealers as compared to $777.7 million during the first three quarters of 2006. 2007 contract purchases represent an increase of 30.7% vs. the same period in 2006. The Company's managed receivables totaled $2,053.1 million as of September 30, 2007, an increase of $572.4 million, or 38.7%, from $1,480.7 million as of September 30, 2006, as follows ($ in millions):
| | | September 30, 2007 | | September 30, 2006 | |
| Owned by Consolidated Subsidiaries* | | $ | 2,047.3 | | $ | 1,422.3 | |
| Owned by Non-Consolidated Subsidiaries | | | 5.1 | | | 52.5 | |
| As Third Party Servicer for SeaWest Financial | | | 0.8 | | | 5.9 | |
| Total | | $ | 2,053.1 | | $ | 1,480.7 | |
* Before $149.9 million and $116.9 million of allowance for credit losses, deferred acquisition fees and repossessed vehicles for 2007 and 2006, respectively.
In addition, the Company continued its regular quarterly securitization program with the September sale of $327.5 million of asset backed notes. As previously announced, the quarterly transaction was executed with lower credit enhancement requirements than the second quarter transaction. The Company also issued $60 million of two-year notes under a new $120 million revolving and term residual interest financing facility.
Annualized net charge-offs during the first nine month of 2007 were 4.95% of the average owned portfolio as compared to 4.00% during the same period in 2006. Delinquencies greater than 30 days (including repossession inventory) were 6.06% of the total owned portfolio as of September 30, 2007 as compared to 4.97% as of September 30, 2006.
“We are pleased with another solid quarter both financially and operationally,” said Charles E. Bradley, Jr., President and Chief Executive Officer. “In the third quarter we achieved our 10th straight quarter of pretax income growth and were able to navigate the turbulent capital markets to successfully close our regular quarterly term securitization. Our volume of new contract purchases remained strong and credit performance met our expectations.”
Conference Call
CPS announced that it will hold a conference call tomorrow, October 18, 2007, at 1:30 p.m. ET to discuss its quarterly earnings. Those wishing to participate by telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the scheduled time.
A replay will be available between October 18, 2007 and October 25, 2007, beginning one hour after conclusion of the call, by dialing 877-519-4471 or 973-341-3080 for international participants, with pin number 9337877. A broadcast of the conference call will also be available live and for 30 days after the call via the Company’s web site at www.consumerportfolio.com and at www.streetevents.com.
About Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. is a specialty finance company engaged in purchasing and servicing new and used retail automobile contracts originated primarily by franchised automobile dealerships and to a lesser extent by select independent dealers of used automobiles in the United States. We serve as an alternative source of financing for dealers, facilitating sales to sub-prime customers, who have limited credit history, low income or past credit problems and who otherwise might not be able to obtain financing from traditional sources.
Forward-looking statements in this news release include the Company's recorded revenue, expense and provision for credit losses, because these items are dependent on the Company’s estimates of future losses. The accuracy of such estimates may be adversely affected by various factors, which include (in addition to risks relating to the economy generally) the following: possible increased delinquencies; repossessions and losses on retail installment contracts; incorrect prepayment speed and/or discount rate assumptions; possible unavailability of qualified personnel, which could adversely affect the Company’s ability to service its portfolio; possible increases in the rate of consumer bankruptcy filings or the effects of recent changes in bankruptcy law, which could adversely affect the Company’s rights to collect payments from its portfolio; other changes in government regulations affecting consumer credit; possible declines in the market price for used vehicles, which could adversely affect the Company’s realization upon repossessed vehicles; and economic conditions in geographic areas in which the Company's business is concentrated. All of such factors also may affect the Company’s future earnings, as to which there can be no assurance.
Any implication that the results of the most recently completed quarter are indicative of future results is disclaimed, and the reader should draw no such inference. Factors such as those identified above in relation to provision for credit losses may affect future performance.
Investor Relations Contact
| Robert E. Riedl | | |
| Consumer Portfolio Services, Inc. | | |
| 949-753-6800 | | |
Consumer Portfolio Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| | | Three months ended | | Nine months ended | |
| | | September 30, | | September 30, | |
| | | 2007 | | 2006 | | 2007 | | 2006 | |
Revenues: | | | | | | | | | |
| Interest income | | $ | 97,423 | | $ | 70,623 | | $ | 267,361 | | $ | 188,189 | |
| Servicing fees | | | 274 | | | 633 | | | 668 | | | 2,436 | |
| Other income | | | 5,058 | | | 2,457 | | | 17,020 | | | 8,344 | |
| | | | 102,755 | | | 73,713 | | | 285,049 | | | 198,969 | |
Expenses: | | | | | | | | | | | | | |
| Employee costs | | | 11,566 | | | 9,273 | | | 33,704 | | | 28,349 | |
| General and administrative | | | 6,335 | | | 6,159 | | | 18,386 | | | 16,948 | |
| Interest | | | 36,382 | | | 25,075 | | | 99,600 | | | 65,412 | |
| Provision for credit losses | | | 36,300 | | | 24,045 | | | 98,458 | | | 65,322 | |
| Other expenses | | | 5,832 | | | 4,896 | | | 16,914 | | | 14,256 | |
| | | | 96,415 | | | 69,448 | | | 267,062 | | | 190,287 | |
| Income before income taxes | | | 6,340 | | | 4,265 | | | 17,987 | | | 8,682 | |
| Income taxes | | | 2,663 | | | - | | | 7,591 | | | - | |
| Net income | | $ | 3,677 | | $ | 4,265 | | $ | 10,396 | | $ | 8,682 | |
| | | | | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | | | | |
| Basic | | $ | 0.18 | | $ | 0.20 | | $ | 0.49 | | $ | 0.40 | |
| Diluted | | | 0.16 | | | 0.18 | | | 0.45 | | | 0.36 | |
| | | | | | | | | | | | | | |
Number of shares used in computing earnings per share: | | | | | | | | | | | | | |
| Basic | | | 20,779 | | | 21,840 | | | 21,279 | | | 21,804 | |
| Diluted | | | 22,438 | | | 23,850 | | | 23,184 | | | 24,139 | |
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| | | September 30, | | December 31, | |
| | | 2007 | | 2006 | |
| | | | | | |
| Cash | | $ | 16,907 | | $ | 14,215 | |
| Restricted cash | | | 258,060 | | | 193,001 | |
| Total Cash | | | 274,967 | | | 207,216 | |
| Finance receivables | | | 1,997,106 | | | 1,480,794 | |
| Allowance for finance credit losses | | | (99,675 | ) | | (79,380 | ) |
| Finance receivables, net | | | 1,897,431 | | | 1,401,414 | |
| Residual interest in securitizations | | | 1,551 | | | 13,795 | |
| Other assets | | | 119,636 | | | 106,169 | |
| | | $ | 2,293,585 | | $ | 1,728,594 | |
| | | | | | | | |
| Accounts payable and other liabilities | | $ | 35,809 | | $ | 31,185 | |
| Warehouse lines of credit | | | 79,185 | | | 72,950 | |
| Residual interest financing | | | 60,000 | | | 31,378 | |
| Securitization trust debt | | | 1,984,023 | | | 1,442,995 | |
| Senior secured debt | | | - | | | 25,000 | |
| Subordinated debt | | | 22,065 | | | 13,574 | |
| | | | 2,181,082 | | | 1,617,082 | |
| | | | | | | | |
| Shareholders' equity | | | 112,503 | | | 111,512 | |
| | | $ | 2,293,585 | | $ | 1,728,594 | |
Operating and Performance Data ($ in thousands) | | At and for the | | At and for the | |
| | | Three months ended | | Nine months ended | |
| | | September 30, | | September 30, | |
| | | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | | |
| Contract purchases | | | 340,244 | | | 254,425 | | | 1,016,547 | | | 777,657 | |
| | | | | | | | | | | | | | |
| Total managed portfolio | | | 2,053,135 | | | 1,480,682 | | | 2,053,135 | | | 1,480,682 | |
| | | | | | | | | | | | | | |
| Average managed portfolio | | | 2,008,911 | | | 1,449,128 | | | 1,839,382 | | | 1,322,675 | |
| | | | | | | | | | | | | | |
| Net interest margin (1) | | | 61,041 | | | 45,548 | | | 167,761 | | | 122,777 | |
| | | | | | | | | | | | | | |
| Risk adjusted margin (2) | | | 24,741 | | | 21,503 | | | 69,303 | | | 57,455 | |
| | | | | | | | | | | | | | |
| Core operating expenses (3) | | | 23,733 | | | 20,328 | | | 69,004 | | | 59,553 | |
| Annualized % of average managed portfolio | | | 4.73 | % | | 5.61 | % | | 5.00 | % | | 6.00 | % |
| | | | | | | | | | | | | | |
| Annualized return on managed assets (4) | | | 1.26 | % | | 1.18 | % | | 1.30 | % | | 0.88 | % |
| | | | | | | | | | | | | | |
| Allowance as % of finance receivables | | | 4.99 | % | | 5.69 | % | | | | | | |
| | | | | | | | | | | | | | |
| Delinquencies | | | | | | | | | | | | | |
| 31+ Days | | | 4.61 | % | | 3.65 | % | | | | | | |
| | | | | | | | | | | | | | |
| Repossession Inventory | | | 1.45 | % | | 1.32 | % | | | | | | |
| | | | | | | | | | | | | | |
| Total Delinquencies and Repossession Inventory | | | 6.06 | % | | 4.97 | % | | | | | | |
| | | | | | | | | | | | | | |
| Annualized net charge-offs as % of average owned portfolio | | | 5.57 | % | | 4.51 | % | | 4.95 | % | | 4.00 | % |
| (1) | Interest income less interest expense. |
| (2) | Net interest margin less provision for credit losses. |
| (3) | Total expenses less interest and provision for credit losses. |
| (4) | Pretax income divided by average managed portfolio. |
