Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 01, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | CONSUMER PORTFOLIO SERVICES INC | ||
Entity Central Index Key | 889,609 | ||
Document Type | 10-K | ||
Trading Symbol | CPSS | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 77,253,103 | ||
Entity Common Stock, Shares Outstanding | 21,620,233 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash and cash equivalents | $ 12,731 | $ 13,936 |
Restricted cash and equivalents | 111,965 | 112,754 |
Finance receivables | 2,304,984 | 2,267,943 |
Less: Allowance for finance credit losses | (109,187) | (95,578) |
Finance receivables, net | 2,195,797 | 2,172,365 |
Furniture and equipment, net | 1,752 | 2,017 |
Deferred tax assets, net | 32,446 | 42,845 |
Accrued interest receivable | 46,753 | 36,233 |
Other assets | 23,397 | 30,252 |
Total | 2,424,841 | 2,410,402 |
Liabilities | ||
Accounts payable and accrued expenses | 28,715 | 24,977 |
Warehouse lines of credit | 112,408 | 103,358 |
Securitization trust debt | 2,083,215 | 2,080,900 |
Subordinated renewable notes | 16,566 | 14,949 |
Total | 2,240,904 | 2,224,184 |
Commitments and contingencies | ||
Shareholders' Equity | ||
Preferred stock | 0 | 0 |
Common stock, no par value; authorized 75,000,000 shares; 21,488,589 and 23,587,126 shares issued and outstanding at December 31, 2017 and 2016, respectively | 71,582 | 77,128 |
Retained earnings | 119,537 | 115,772 |
Accumulated other comprehensive loss | (7,182) | (6,682) |
Total stockholders' equity | 183,937 | 186,218 |
Total liabilities and stockholders' equity | 2,424,841 | 2,410,402 |
Series A Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred stock | 0 | 0 |
Series B Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred stock | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Shareholders' Equity | ||
Preferred stock, par value (in dollars per share) | $ 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 (in dollars per share) | ||
Common stock, authorized | 75,000,000 | 75,000,000 |
Common stock, issued | 21,488,589 | 23,587,126 |
Common stock, outstanding | 21,488,589 | 23,587,126 |
Series A Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred stock, par value (in dollars per share) | $ 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 (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized | 1,870 | 1,870 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Interest income | $ 424,174 | $ 408,996 | $ 349,912 |
Other income | 10,209 | 13,286 | 13,738 |
Total revenues | 434,383 | 422,282 | 363,650 |
Expenses: | |||
Employee costs | 72,967 | 65,549 | 59,556 |
General and administrative | 26,578 | 24,840 | 20,160 |
Interest | 92,345 | 79,941 | 57,745 |
Provision for credit losses | 186,713 | 178,511 | 142,618 |
Marketing | 15,613 | 17,818 | 17,470 |
Occupancy | 7,162 | 5,185 | 4,082 |
Depreciation and amortization | 934 | 777 | 637 |
Total operating expenses | 402,312 | 372,621 | 302,268 |
Income before income tax expense | 32,071 | 49,661 | 61,382 |
Income tax expense | 28,306 | 20,361 | 26,701 |
Net income | $ 3,765 | $ 29,300 | $ 34,681 |
Earnings per share: | |||
Basic (in dollars per share) | $ 0.17 | $ 1.20 | $ 1.34 |
Diluted (in dollars per share) | $ 0.14 | $ 1.01 | $ 1.10 |
Number of shares used in computing earnings per share: | |||
Basic (in shares) | 22,687 | 24,356 | 25,935 |
Diluted (in shares) | 27,214 | 29,035 | 31,584 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 3,765 | $ 29,300 | $ 34,681 |
Other comprehensive income (loss); change in funded status of pension plan, net of $232, $7 and $1,016 in tax for 2017, 2016 and 2015, respectively | (500) | (32) | (1,599) |
Comprehensive income | $ 3,265 | $ 29,268 | $ 33,082 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Other comprehensive income (loss); change in funded status of pension plan, tax | $ 232 | $ 7 | $ 1,016 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balance at beginning at Dec. 31, 2014 | $ 80,513 | $ 51,791 | $ (5,051) | $ 127,253 |
Balance at beginning (in shares) at Dec. 31, 2014 | 25,541 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued upon exercise of options and warrants | $ 1,726 | 1,726 | ||
Common stock issued upon exercise of options and warrants (in shares) | 1,140 | |||
Repurchase of common stock | $ (5,926) | (5,926) | ||
Repurchase of common stock (in shares) | (1,064) | |||
Pension benefit obligation | (1,599) | (1,599) | ||
Stock-based compensation | 5,024 | 5,024 | ||
Net income | 34,681 | 34,681 | ||
Balance at end at Dec. 31, 2015 | $ 81,337 | 86,472 | (6,650) | 161,159 |
Balance at end (in shares) at Dec. 31, 2015 | 25,617 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued upon exercise of options and warrants | $ 706 | 706 | ||
Common stock issued upon exercise of options and warrants (in shares) | 448 | |||
Repurchase of common stock | $ (10,468) | (10,468) | ||
Repurchase of common stock (in shares) | (2,478) | |||
Pension benefit obligation | (32) | (32) | ||
Stock-based compensation | 5,553 | 5,553 | ||
Net income | 29,300 | 29,300 | ||
Balance at end at Dec. 31, 2016 | $ 77,128 | 115,772 | (6,682) | 186,218 |
Balance at end (in shares) at Dec. 31, 2016 | 23,587 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued upon exercise of options and warrants | $ 1,085 | 1,085 | ||
Common stock issued upon exercise of options and warrants (in shares) | 647 | |||
Repurchase of common stock | $ (12,346) | (12,346) | ||
Repurchase of common stock (in shares) | (2,745) | |||
Pension benefit obligation | (500) | (500) | ||
Stock-based compensation | 5,715 | 5,715 | ||
Net income | 3,765 | 3,765 | ||
Balance at end at Dec. 31, 2017 | $ 71,582 | $ 119,537 | $ (7,182) | $ 183,937 |
Balance at end (in shares) at Dec. 31, 2017 | 21,489 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 3,765 | $ 29,300 | $ 34,681 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Accretion of deferred acquisition fees | 1,305 | (2,980) | (8,954) |
Amortization of discount on securitization trust debt | 0 | 20 | 62 |
Depreciation and amortization | 934 | 777 | 637 |
Amortization of deferred financing costs | 8,738 | 8,389 | 7,017 |
Provision for credit losses | 186,713 | 178,511 | 142,618 |
Stock-based compensation expense | 5,715 | 5,553 | 5,024 |
Interest income on residual assets | 0 | 0 | (92) |
Changes in assets and liabilities: | |||
Accrued interest receivable | (10,520) | (4,686) | (8,175) |
Other assets | 5,361 | (8,739) | 3,237 |
Deferred tax assets, net | 10,399 | (5,248) | 5,250 |
Accounts payable and accrued expenses | 3,238 | (4,564) | 6,250 |
Net cash provided by operating activities | 215,648 | 196,333 | 187,555 |
Cash flows from investing activities: | |||
Originations of finance receivables held for investment | (859,069) | (1,088,785) | (1,060,538) |
Payments received on finance receivables held for investment | 647,619 | 650,379 | 551,880 |
Payments on receivables portfolio at fair value | 4 | 58 | 1,603 |
Change in repossessions held in inventory | 1,490 | 1,629 | (2,369) |
Decreases (increases) in restricted cash and cash equivalents, net | 789 | (6,700) | 69,328 |
Purchase of furniture and equipment | (669) | (1,079) | (1,191) |
Net cash used in investing activities | (209,836) | (444,498) | (441,287) |
Cash flows from financing activities: | |||
Proceeds from issuance of securitization trust debt | 852,615 | 1,197,515 | 795,000 |
Proceeds from issuance of subordinated renewable notes | 4,083 | 2,911 | 1,551 |
Payments on subordinated renewable notes | (2,466) | (3,100) | (1,646) |
Net proceeds from (repayments of) warehouse lines of credit | 9,309 | (91,496) | 139,622 |
Repayments of residual interest financing debt | 0 | (9,042) | (3,285) |
Repayment of securitization trust debt | (851,193) | (834,880) | (661,960) |
Repayment of debt secured by receivables measured at fair value | 0 | 0 | (1,250) |
Payment of financing costs | (8,104) | (9,367) | (8,637) |
Repurchase of common stock | (12,346) | (10,468) | (5,926) |
Exercise of options and warrants | 1,085 | 706 | 1,726 |
Net cash provided by (used in) financing activities | (7,017) | 242,779 | 255,195 |
Increase (decrease) in cash and cash equivalents | (1,205) | (5,386) | 1,463 |
Cash and cash equivalents at beginning of year | 13,936 | 19,322 | 17,859 |
Cash and cash equivalents at end of year | 12,731 | 13,936 | 19,322 |
Cash paid during the period for: | |||
Interest | 83,110 | 71,077 | 50,019 |
Income taxes | 9,319 | 32,909 | 13,690 |
Non-cash financing activities: | |||
Pension benefit obligation, net | $ 500 | $ 32 | $ 1,599 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (1) Summary of Significant Accounting Policies Description of Business Consumer Portfolio Services, Inc. ("CPS") was incorporated in California on March 8, 1991. CPS and its subsidiaries (collectively, the "Company") specialize in purchasing and servicing retail automobile installment sale contracts ("Contracts") originated by licensed motor vehicle dealers ("Dealers") located throughout the United States. Dealers located in Texas, Ohio, California, Florida and North Carolina represented 7.4%, 7.4%, 7.1%, 5.9% and 5.8%, respectively, of contracts purchased during 2017 compared with 7.3%, 6.8%, 7.2%, 5.6% and 5.3% respectively in 2016. No other state had a concentration in excess of 5.8% in 2017. We specialize in contracts with vehicle purchasers who generally would not be expected to qualify for traditional financing provided by commercial banks or automobile manufacturers’ captive finance companies. We are subject to various regulations and laws as they relate to the extension of credit in consumer credit transactions. Failure to comply with such laws and regulations could have a material adverse effect on the Company. Principles of Consolidation The Consolidated Financial Statements include the accounts of Consumer Portfolio Services, Inc. and its wholly-owned subsidiaries, certain of which are special purpose subsidiaries ("SPS"), formed to accommodate the structures under which we purchase and securitize our contracts. The Consolidated Financial Statements also include the accounts of CPS Leasing, Inc., an 80% owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of cash on hand and due from banks and money market accounts. Substantially all of our cash is deposited at three financial institutions. We maintain cash due from banks in excess of the banks' insured deposit limits. We do not believe we are exposed to any significant credit risk on these deposits. As part of certain financial covenants related to debt facilities, we are required to maintain a minimum unrestricted cash balance. As of December 31, 2017, our unrestricted cash balance was $12.7 million, which exceeded the minimum amounts required by our financial covenants. Finance Receivables Finance receivables, which we have the intent and ability to hold for the foreseeable future or until maturity or payoff, are presented at cost. All finance receivable contracts are held for investment. Interest income is accrued on the unpaid principal balance. Origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Generally, payments received on finance receivables are restricted to certain securitized pools, and the related contracts cannot be resold. Finance receivables are charged off pursuant to the controlling documents of certain securitized pools, generally as described below under Charge Off Policy. Management may authorize an extension of payment terms if collection appears likely during the next calendar month. Our portfolio of finance receivables consists of small-balance homogeneous contracts that are collectively evaluated for impairment on a portfolio basis. We report delinquency on a contractual basis. Once a Contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the Contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a Contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. Allowance for Finance Credit Losses In order to estimate an appropriate allowance for losses likely incurred on finance receivables, we use a loss allowance methodology commonly referred to as "static pooling," which stratifies the finance receivable portfolio into separately identified pools based on their period of origination, then uses historical performance of seasoned pools to estimate future losses on current pools. Historical loss experience is adjusted as necessary for current economic conditions. We consider our portfolio of finance receivables to be relatively homogenous and consequently we analyze credit performance primarily in the aggregate rather than stratification by any particular credit quality indicator. Using analytical and formula driven techniques, we estimate an allowance for finance credit losses, which we believe is adequate for probable incurred credit losses that can be reasonably estimated in our portfolio of finance receivable contracts. For each monthly pool of contracts that we purchase, we begin establishing the allowance in the month of acquisition and increase it over the subsequent 11 months, through a provision for credit losses charged to our Consolidated Statement of Income. Net losses incurred on finance receivables are charged to the allowance. We evaluate the adequacy of the allowance by examining current delinquencies, the characteristics of the portfolio, the value of the underlying collateral and historical loss trends. As conditions change, our level of provisioning and/or allowance may change. Charge Off Policy Delinquent contracts for which the related financed vehicle has been repossessed are generally charged off at the earliest of (1) the month in which the proceeds from the sale of the financed vehicle are received, (2) the month in which 90 days have passed from the date of repossession or (3) the month in which the Contract becomes seven scheduled payments past due (see Repossessed and Other Assets below). The amount charged off is the remaining principal balance of the Contract, after the application of the net proceeds from the liquidation of the financed vehicle. With respect to delinquent contracts for which the related financed vehicle has not been repossessed, the remaining principal balance is generally charged off no later than the end of the month that the Contract becomes five scheduled payments past due. Contract Acquisition Fees and Origination Costs Upon purchase of a Contract from a Dealer, we generally either charge or advance the Dealer an acquisition fee. Dealer acquisition fees and deferred origination costs are applied to the carrying value of finance receivables and are accreted into earnings as an adjustment to the yield over the estimated life of the Contract using the interest method. Repossessed and Other Assets If a Contract obligor fails to make or keep promises for payments, or if the obligor is uncooperative or attempts to evade contact or hide the vehicle, a supervisor will review the collection activity relating to the account to determine if repossession of the vehicle is warranted. Generally, such a decision is made between the 60th and 90th day past the obligor’s payment due date, but could occur sooner or later, depending on the specific circumstances. At the time the vehicle is repossessed we stop accruing interest on the Contract, and reclassify the remaining Contract balance to the line item "Other Assets" on our Consolidated Balance Sheet at its estimated fair value less costs to sell. Included in other assets in the accompanying Consolidated Balance Sheets are repossessed vehicles pending sale of $9.7 million and $11.1 million at December 31, 2017 and 2016, respectively. Treatment of Securitizations Our term securitization structure has generally been as follows: We sell contracts we acquire to a wholly-owned SPS, which has been established for the limited purpose of buying and reselling our contracts. The SPS then transfers the same contracts to another entity, typically a statutory trust ("Trust"). The Trust issues interest-bearing asset-backed securities ("Notes"), in a principal amount equal to or less than the aggregate principal balance of the contracts. We typically sell these contracts to the Trust at face value and without recourse, except representations and warranties that we make to the Trust that are similar to those provided to us by the Dealer. One or more investors (the "Noteholders") purchase the Notes issued by the Trust; the proceeds from the sale of the Notes are then used to purchase the contracts from us. We may retain or sell subordinated Notes issued by the Trust. In addition, we have provided "Credit Enhancement" for the benefit of the Noteholders in three forms: (1) an initial cash deposit to a bank account (a "Spread Account") held by the Trust, (2) overcollateralization of the Notes, where the principal balance of the Notes issued is less than the principal balance of the contracts, and (3) in the form of subordinated Notes. The agreements governing the securitization transactions (collectively referred to as the "Securitization Agreements") require that the initial level of Credit Enhancement be supplemented by a portion of collections from the contracts until the level of Credit Enhancement reaches specified levels, which are then maintained. The specified levels are generally computed as a percentage of the principal amount remaining unpaid under the related contracts. The specified levels at which the Credit Enhancement is to be maintained will vary depending on the performance of the portfolios of contracts held by the Trusts and on other conditions. Such levels have increased and decreased from time to time based on performance of the various portfolios, and have also varied from one Trust to another. Our warehouse securitization structures are similar to the above, except that (i) the SPS that purchases the contracts pledges the contracts to secure promissory notes or loans that it issues, and (ii) no increase in the required amount of Credit Enhancement is contemplated. Upon each sale of contracts in a securitization structured as a secured financing, we retain as assets on our Consolidated Balance Sheet the securitized contracts and record as indebtedness the Notes issued in the transaction. We have the power to direct the most significant activities of the SPS. In addition, we have the obligation to absorb losses and the rights to receive benefits from the SPS, both of which could be potentially significant to the SPS. These types of securitization structures are treated as secured financings, in which the receivables remain on our Consolidated Balance Sheet, and the debt issued by the SPS is shown as a securitization trust debt on our Consolidated Balance Sheet. We receive periodic base servicing fees for the servicing and collection of the contracts. In addition, we are entitled to the cash flows from the Trusts that represent collections on the contracts in excess of the amounts required to pay principal and interest on the Notes, the base servicing fees, and certain other fees (such as trustee and custodial fees). Required principal payments on the Notes are generally defined as the payments sufficient to keep the principal balance of the Notes equal to the aggregate principal balance of the related contracts (excluding those contracts that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related Securitization Agreements require accelerated payment of principal until the principal balance of the Notes is reduced to the specified percentage. Such accelerated principal payment is said to create "overcollateralization" of the Notes. If the amount of cash required for payment of fees, interest and principal on the senior Notes exceeds the amount collected during the collection period, the shortfall is generally withdrawn from the Spread Account, if any. If the cash collected during the period exceeds the amount necessary for the above allocations plus required principal payments on the subordinated Notes, if any, and there is no shortfall in the related Spread Account or other form of Credit Enhancement, the excess is released to us. If the total Credit Enhancement amount is not at the required level, then the excess cash collected is retained in the Trust until the specified level is achieved. Cash in the Spread Accounts is restricted from our use. Cash held in the various Spread Accounts is invested in high quality, liquid investment securities, as specified in the Securitization Agreements. In all of our term securitizations we have transferred the receivables (through a subsidiary) to the securitization Trust. We report the assets and liabilities of the securitization Trust on our Consolidated Balance Sheet. The Noteholders’ and the related securitization Trusts’ recourse against us for failure of the contract obligors to make payments on a timely basis is limited, in general, to our Finance Receivables, and Spread Accounts. Servicing We consider the contractual servicing fee received on our managed portfolio held by non-consolidated subsidiaries to be equal to adequate compensation. Additionally, we consider that these fees would fairly compensate a substitute servicer, should one be required. As a result, no servicing asset or liability has been recognized. Servicing fees received on the managed portfolio held by non-consolidated subsidiaries are reported as income when earned. Servicing fees received on the managed portfolio held by consolidated subsidiaries are included in interest income when earned. Servicing costs are charged to expense as incurred. Servicing fees receivable, which are included in Other Assets in the accompanying Consolidated Balance Sheets, represent fees earned but not yet remitted to us by the trustee. Furniture and Equipment Furniture and equipment are stated at cost net of accumulated depreciation. We calculate depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Assets held under capital leases and leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related lease terms. Amortization expense on assets acquired under capital lease is included with depreciation expense on owned assets. Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Other Income The following table presents the primary components of Other Income: Year Ended December 31, 2017 2016 2015 (In thousands) Direct mail revenues $ 6,432 $ 9,202 $ 8,927 Convenience fee revenue 1,900 2,145 2,610 Recoveries on previously charged-off contracts 563 766 1,079 Sales tax refunds 866 811 616 Other 448 362 506 $ 10,209 $ 13,286 $ 13,738 Earnings Per Share The following table illustrates the computation of basic and diluted earnings per share: Year Ended December 31, 2017 2016 2015 (In thousands, except per share data) Numerator: Numerator for basic and diluted earnings per share $ 3,765 $ 29,300 $ 34,681 Denominator: Denominator for basic earnings per share - weighted average number of common shares outstanding during the year 22,687 24,356 25,935 Incremental common shares attributable to exercise of outstanding options and warrants 4,527 4,679 5,649 Denominator for diluted earnings per share 27,214 29,035 31,584 Basic earnings per share $ 0.17 $ 1.20 $ 1.34 Diluted earnings per share $ 0.14 $ 1.01 $ 1.10 Incremental shares of 7.5 million, 7.9 million and 6.8 million related to stock options and warrants have been excluded from the diluted earnings per share calculation for the years ended December 31, 2017, 2016 and 2015, respectively, because the effect is anti-dilutive. Deferral and Amortization of Debt Issuance Costs Costs related to the issuance of debt are deferred and amortized using the interest method over the contractual or expected term of the related debt. Unamortized debt issuance costs are presented as a direct deduction to the carrying amount of the related debt on our Consolidated Balance Sheets. Income Taxes The Company and its subsidiaries file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain states. We utilize the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the future tax consequences attributable to the differences between the financial statement values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We estimate a valuation allowance against that portion of the deferred tax asset whose utilization in future periods is not more than likely. Purchases of Company Stock We record purchases of our own common stock at cost and treat the shares as retired. Stock Option Plan We recognize compensation costs in the financial statements based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. Compensation cost is recognized over the required service period, generally defined as the vesting period. 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. These material estimates that could be susceptible to changes in the near term and, accordingly, actual results could differ from those estimates. Reclassification Certain amounts for the prior year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’ equity. Financial Covenants Certain of our securitization transactions, our residual interest financing and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2017 we were in compliance with all such financial covenants. 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. We have recorded a liability as of December 31, 2017, which represents our best estimate of the immaterial aggregate probable incurred losses for legal contingencies. The amount of losses that may ultimately be incurred, over and above such losses as are probable, cannot be estimated with certainty. Recently Issued Accounting Standards In February 2018, as a result of the enactment of the Tax Cuts and Jobs Act (the Tax Act), the FASB issued new accounting guidance on the reclassification of certain tax effects from accumulated other comprehensive income to retained earnings. The guidance is effective January 1, 2019, with early adoption permitted. The Company is evaluating the new guidance along with any impact on the Company’s financial position, results of operations and cash flows, none of which are expected to be material. In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The revised accounting guidance changes the criteria under which credit losses are measured. The amendment introduces a new credit reserving model known as the Current Expected Credit Loss (CECL) model, which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to establish credit loss estimates. This new accounting guidance will be effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the provisions of ASU No. 2016-13, however, it is expected that the new CECL model will alter the assumptions used in calculating the Company's credit losses, given the change to estimated losses for the estimated life of the financial asset, and will likely result in a material effect on the Company’s financial position and results of operations. In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), superseding the revenue recognition requirements in ASC 605. This ASU requires an entity to recognize revenue for 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 amendment includes a five-step process to assist an entity in achieving the main principle(s) of revenue recognition under ASC 605. The Company has adopted this ASU in the first quarter of 2018 and expects the new guidance will not have a material effect on its financial position, results of operations and cash flows. |
2. Restricted Cash
2. Restricted Cash | 12 Months Ended |
Dec. 31, 2017 | |
Cash and Cash Equivalents [Abstract] | |
Restricted Cash | ( 2) Restricted Cash Restricted cash consists of cash and cash equivalent accounts relating to our outstanding securitization trusts and credit facilities. The amount of restricted cash on our Consolidated Balance Sheets was $112.0 million and $112.8 million as of December 31, 2017 and 2016, respectively. Our securitization transactions and one of our warehouse credit facilities require that we establish cash reserves, or spread accounts, as additional credit enhancement. These cash reserves, which are included in restricted cash, were $45.7 million and $40.8 million as of December 31, 2017 and 2016, respectively. |
3. Finance Receivables
3. Finance Receivables | 12 Months Ended |
Dec. 31, 2017 | |
Finance Receivables | |
Finance Receivables | (3) Finance Receivables Our portfolio of finance receivables consists of small-balance homogeneous contracts comprising a single segment and class that is collectively evaluated for impairment on a portfolio basis according to delinquency status. Our contract purchase guidelines are designed to produce a homogenous portfolio. We report delinquency on a contractual basis. Once a contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. The following table presents the components of finance receivables, net of unearned interest: December 31, 2017 2016 Finance receivables (In thousands) Automobile finance receivables, net of unearned interest $ 2,298,608 $ 2,266,619 Unearned acquisition fees, discounts and deferred origination costs, net 6,376 1,324 Finance receivables $ 2,304,984 $ 2,267,943 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 reported as delinquent. In certain circumstances we will grant obligors one-month payment extensions. The only modification of terms is to advance the obligor’s next due date by one month and extend the maturity date of the receivable by one month. In certain limited cases, a two-month extension may be granted. There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, we consider such extensions to be insignificant delays in payments rather than troubled debt restructurings. The following table summarizes the delinquency status of finance receivables as of December 31, 2017 and 2016: December 31, 2017 2016 (In thousands) Delinquency Status Current $ 2,069,617 $ 2,053,759 31 - 60 days 138,395 116,073 61 - 90 days 63,081 52,404 91 + days 27,515 44,383 $ 2,298,608 $ 2,266,619 Finance receivables totaling $27.5 million and $44.4 million at December 31, 2017 and 2016, respectively, have been placed on non-accrual status as a result of their delinquency status. The following table presents a summary of the activity for the allowance for finance credit losses, for the years ended December 31, 2017, 2016 and 2015: December 31, 2017 2016 2015 (In thousands) Balance at beginning of year $ 95,578 $ 75,603 $ 61,460 Provision for credit losses 186,713 178,511 142,618 Charge-offs (211,948 ) (192,366 ) (156,553 ) Recoveries 38,844 33,830 28,078 Balance at end of year $ 109,187 $ 95,578 $ 75,603 Excluded from finance receivables are contracts that were previously classified as finance receivables but were reclassified as other assets because we have repossessed the vehicle securing the Contract. The following table presents a summary of such repossessed inventory together with the allowance for losses on repossessed inventory: December 31, 2017 2016 (In thousands) Gross balance of repossessions in inventory $ 33,679 $ 40,069 Allowance for losses on repossessed inventory (24,024 ) (28,924 ) Net repossessed inventory included in other assets $ 9,655 $ 11,145 |
4. Furniture and Equipment
4. Furniture and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Furniture and Equipment | (4) Furniture and Equipment The following table presents the components of furniture and equipment: December 31, 2017 2016 (In thousands) Furniture and fixtures $ 1,566 $ 1,566 Computer and telephone equipment 5,470 4,907 Leasehold improvements 1,260 1,154 8,296 7,627 Less: accumulated depreciation and amortization (6,544 ) (5,610 ) $ 1,752 $ 2,017 Depreciation expense totaled $934,000, $777,000 and $637,000 for the years ended December 31, 2017, 2016 and 2015, respectively. |
5. Securitization Trust Debt
5. Securitization Trust Debt | 12 Months Ended |
Dec. 31, 2017 | |
Securitization Trust Debt | |
Securitization Trust Debt | (5) Securitization Trust Debt We have completed numerous term securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table: Series Final Scheduled Payment Date (1) Receivables Pledged at December 31, 2017 (2) Initial Principal Outstanding Principal at December 31, 2017 Outstanding Principal at December 31, 2016 Weighted Average Interest Rate at December 31, 2017 (Dollars in thousands) CPS 2012-C December 2019 – 147,000 – 14,421 – CPS 2012-D March 2020 – 160,000 – 17,865 – CPS 2013-A June 2020 – 185,000 – 28,661 – CPS 2013-B September 2020 21,251 205,000 18,407 37,570 2.09% CPS 2013-C December 2020 26,518 205,000 25,559 46,830 5.88% CPS 2013-D March 2021 26,921 183,000 24,917 46,345 5.11% CPS 2014-A June 2021 33,120 180,000 30,521 54,988 4.33% CPS 2014-B September 2021 46,600 202,500 44,516 75,140 3.67% CPS 2014-C December 2021 73,634 273,000 71,174 116,280 3.87% CPS 2014-D March 2022 80,784 267,500 79,099 127,307 4.17% CPS 2015-A June 2022 89,171 245,000 87,194 134,466 3.73% CPS 2015-B September 2022 104,354 250,000 102,873 153,893 3.63% CPS 2015-C December 2022 142,703 300,000 141,362 207,636 4.15% CPS 2016-A March 2023 182,657 329,460 180,761 262,260 4.45% CPS 2016-B June 2023 206,881 332,690 201,199 284,752 4.50% CPS 2016-C September 2023 208,815 318,500 203,504 285,618 4.06% CPS 2016-D April 2024 153,671 206,325 149,671 200,221 3.14% CPS 2017-A April 2024 166,693 206,320 161,892 – 3.31% CPS 2017-B December 2023 198,860 225,170 186,594 – 2.90% CPS 2017-C September 2024 207,158 224,825 197,155 – 2.83% CPS 2017-D June 2024 193,957 196,300 189,277 – 2.74% $ 2,163,746 $ 4,842,590 $ 2,095,675 $ 2,094,253 ___________________ (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 $873.7 million in 2018, $612.3 million in 2019, $362.5 million in 2020, $179.3 million in 2021, $49.5 million in 2022, and $5.9 million in 2023. (2) Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets. Debt issuance costs of $12.5 million and $13.4 million as of December 31, 2017 and December 31, 2016, respectively, have been excluded from the table above. These debt issuance costs are presented as a direct deduction to the carrying amount of the Securitization trust debt on our Consolidated Balance Sheets. All of the securitization trust debt was issued in private placement transactions to qualified institutional investors. The debt was issued by our wholly-owned, bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by any of our other assets. The terms of the various securitization agreements related to the issuance of the securitization trust debt require that certain delinquency and credit loss criteria be met with respect to the collateral pool, and require that we maintain minimum levels of liquidity and net worth and not exceed maximum leverage levels. We were in compliance with all such covenants as of December 31, 2017. We are responsible for the administration and collection of the contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional credit enhancement for the Notes or to be applied to make payments on the securitization trust debt. As of December 31, 2017, restricted cash under the various agreements totaled approximately $112.0 million. Interest expense on the securitization trust debt is composed of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, insurance premiums, amortization of deferred financing costs, and amortization of discounts required on the notes at the time of issuance. Deferred financing costs related to the securitization trust debt are amortized using the interest method. Accordingly, the effective cost of borrowing of the securitization trust debt is greater than the stated rate of interest. Our wholly-owned, bankruptcy remote subsidiaries were formed to facilitate the above asset-backed financing transactions. Similar bankruptcy remote subsidiaries issue the debt outstanding under our warehouse line of credit. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. All such transactions, treated as secured financings for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of these subsidiaries are available to pay any of our other creditors. |
6. Debt
6. Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | (6) Deb t The terms of our debt outstanding at December 31, 2017 and 2016 are summarized below: Amount Outstanding at December 31, December 31, 2017 2016 (In thousands) Description Interest Rate Revolving Maturity Warehouse lines of credit 5.50% over one month Libor (Minimum 6.50%) April 2019 $ 25,629 $ 64,352 5.50% over one month Libor (Minimum 6.25%) August 2018 77,546 26,445 6.75% over a commercial paper rate (Minimum 7.75%) November 2019 11,100 14,168 Subordinated renewable notes Weighted average rate of 7.99% and 7.50% at December 31, 2017 and 2016, respectively Weighted average maturity of March 2020 and January 2019 at December 31, 2017 and 2016, respectively 16,566 14,949 $ 130,841 $ 119,914 Debt issuance costs of $1.9 million and $1.6 million as of December 31, 2017 and December 31, 2016, respectively, have been excluded from the table above. These debt issuance costs are presented as a direct deduction to the carrying amount of the Warehouse lines of credit on our Consolidated Balance Sheets. On May 11, 2012, we entered into a $100 million one-year warehouse credit line with Citibank, N.A. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Eight Funding, LLC. The facility provides for effective advances up to 86.0% of eligible finance receivables. The loans under the facility accrue interest at one-month LIBOR plus 5.50% per annum, with a minimum rate of 6.25% per annum. In August 2016, this facility was amended to extend the revolving period to August 2018 and to include an amortization period through August 2019 for any receivables pledged to the facility at the end of the revolving period. At December 31, 2017 there was $77.5 million outstanding under this facility. On April 17, 2015, we entered into an additional $100 million one-year warehouse credit line with Fortress Investment Group. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Six Funding, LLC. The facility provides for effective advances up to 88.0% of eligible finance receivables. The loans under the facility accrue interest at one-month LIBOR plus 5.50% per annum, with a minimum rate of 6.50% per annum. In April 2017, this facility was amended to extend the revolving period to April 2019 followed by an amortization period through April 2021 for any receivables pledged to the facility at the end of the revolving period. At December 31, 2017 there was $25.6 million outstanding under this facility. On November 24, 2015, we entered into an additional $100 million one-year warehouse credit line with affiliates of Credit Suisse Group and Ares Management LP. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Nine Funding, LLC. The facility provides for effective advances up to 88.0% of eligible finance receivables, or up to 80.0% for certain other receivables. The loans under the facility accrue interest at a commercial paper rate plus 6.75% per annum, with a minimum rate of 7.75% per annum. In November 2017, this facility was amended to extend the revolving period to November 2019 followed by an amortization period through November 2021 for any receivables pledged to the facility at the end of the revolving period. At December 31, 2017 there was $11.1 million outstanding under this facility. The total outstanding debt on our three warehouse lines of credit was $114.3 million as of December 31, 2017, compared to $105.0 million outstanding as of December 31, 2016. The costs incurred in conjunction with the above debt are recorded as deferred financing costs on the accompanying Consolidated Balance Sheets and are more fully described in Note 1. We must comply with certain affirmative and negative covenants related to debt facilities, which require, among other things, that we maintain certain financial ratios related to liquidity, net worth and capitalization. Further covenants include matters relating to investments, acquisitions, restricted payments and certain dividend restrictions. See the discussion of financial covenants in Note 1. The following table summarizes the contractual and expected maturity amounts of long term debt as of December 31, 2017: Contractual maturity date Subordinated renewable notes 2018 $ 8,406 2019 1,942 2020 2,616 2021 1,515 2022 458 Thereafter 1,629 Total $ 16,566 |
7. Shareholders' Equity
7. Shareholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Shareholders' Equity | (7) Shareholders’ Equity Common Stock Holders of common stock are entitled to such dividends as our board of directors, in its discretion, may declare out of funds available, subject to the terms of any outstanding shares of preferred stock and other restrictions. In the event of liquidation of the Company, holders of common stock are entitled to receive, pro rata Stock Purchases For the year ending December 31, 2017, we purchased 2,745,493 shares of our common stock at an average price of $4.49. We purchased 2,693,562 shares of our stock in the open market for $12.1 million. In October 2017 our board of directors authorized the repurchase of up to $10 million of our common stock. There was $4.7 million of board authorization remaining in our repurchase plans from prior authorizations at December 31, 2016. There is approximately $12.6 million of board authorization remaining under such plans, which have no expiration date. The remaining purchases of 51,931 shares were related to net exercises of outstanding options and warrants. In transactions during the year ended December 31, 2017, the holders of options and warrants to purchase 110,000 shares of our common stock paid the aggregate $241,000 exercise price by surrender to us of 51,931 of such 110,000 shares. Options and Warrants In 2006, the Company adopted and its shareholders approved the CPS 2006 Long-Term Equity Incentive Plan (the “2006 Plan”) pursuant to which our Board of Directors, or a duly-authorized committee thereof, may grant stock options, restricted stock, restricted stock units and stock appreciation rights to our employees or employees of our subsidiaries, to directors of the Company, and to individuals acting as consultants to the Company or its subsidiaries. In June 2008, May 2012, April 2013 and again in May 2015, the shareholders of the Company approved an amendment to the 2006 Plan to increase the maximum number of shares that may be subject to awards under the 2006 Plan to 5,000,000, 7,200,000, 12,200,000 and 17,200,000, respectively, in each case plus shares authorized under prior plans and not issued. Options that have been granted under the 2006 Plan and a previous plan approved in 1997 have been granted at an exercise price equal to (or greater than) the stock’s fair value at the date of the grant, with terms generally of 7-10 years and vesting generally over 4-5 years. The per share weighted-average fair value of stock options granted during the years ended December 31, 2017, 2016 and 2015 was $1.32, $1.38 and $2.41, respectively. That fair value was estimated using a binomial option pricing model using the weighted average assumptions noted in the following table. We use historical data to estimate the expected term of each option. The volatility estimate is based on the historical and implied volatility of our stock over the period that equals the expected life of the option. Volatility assumptions ranged from 35% to 37% for 2017, 44% to 51% for 2016, and 47% to 51% for 2015. The risk-free interest rate is based on the yield on a U.S. Treasury bond with a maturity comparable to the expected life of the option. The dividend yield is estimated to be zero based on our intention not to issue dividends for the foreseeable future. Year Ended December 31, 2017 2016 2015 Expected life (years) 4.02 4.04 4.21 Risk-free interest rate 1.59% 1.09% 1.35% Volatility 36% 51% 51% Expected dividend yield – – – For the years ended December 31, 2017, 2016 and 2015, we recorded stock-based compensation costs in the amount of $5.7 million, $5.6 million and $5.0 million, respectively. As of December 31, 2017, the unrecognized stock-based compensation costs to be recognized over future periods was equal to $5.8 million. This amount will be recognized as expense over a weighted-average period of 1.9 years. At December 31, 2017 and 2016, options outstanding had intrinsic values of $10.4 million and $17.8 million, respectively. At December 31, 2017 and 2016, options exercisable had intrinsic values of $9.5 million and $14.2 million, respectively. The total intrinsic value of options exercised was $1.9 million and $1.3 million for the years ended December 31, 2017 and 2016, respectively. New shares were issued for all options exercised during the year ended December 2017 and cash of $1.1 million was received. A tax benefit of $178,000 was recorded for the options exercised in 2017. At December 31, 2017, there were a total of 2.5 million additional shares available for grant under the 2006 Plan. Stock option activity for the year ended December 31, 2017 for stock options under the 2006 and 1997 plans is as follows: Number of Shares (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term Options outstanding at the beginning of period 12,595 $ 4.56 N/A Granted 1,470 4.35 N/A Exercised (647 ) 1.68 N/A Forfeited/Expired (283 ) 5.62 N/A Options outstanding at the end of period 13,135 $ 4.66 4.45 years Options exercisable at the end of period 8,789 $ 4.51 4.04 years We did not issue any stock options with an exercise price above or below the market price of the stock on the grant date for the years ended December 31, 2017, 2016 and 2015. In connection with the amendment to and partial repayment of our residual interest financing in July 2008, we issued warrants exercisable for 2,500,000 common shares for $4,071,429. The warrants represent the right to purchase 2,500,000 CPS common shares at a nominal exercise price, at any time prior to July 10, 2018. In March 2010 we repurchased warrants for 500,000 of these shares for $1.0 million. Warrants to purchase 2,000,000 shares remain outstanding as of December 31, 2017. |
8. Interest Income and Interest
8. Interest Income and Interest Expense | 12 Months Ended |
Dec. 31, 2017 | |
Interest Income And Interest Expense | |
Interest Income and Interest Expense | (8) Interest Income and Interest Expense The following table presents the components of interest income: Year Ended December 31, 2017 2016 2015 (In thousands) Interest on finance receivables $ 423,567 $ 408,723 $ 349,796 Other interest income 607 273 116 Interest income $ 424,174 $ 408,996 $ 349,912 The following table presents the components of interest expense: Year Ended December 31, 2017 2016 2015 (In thousands) Securitization trust debt $ 83,084 $ 69,178 $ 48,631 Warehouse lines of credit 7,933 8,569 6,127 Residual interest financing – 846 1,405 Subordinated renewable notes 1,328 1,348 1,582 Interest expense $ 92,345 $ 79,941 $ 57,745 |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (9) Income Taxes Income taxes consist of the following: Year Ended December 31, 2017 2016 2015 (In thousands) Current federal tax expense $ 14,369 $ 22,872 $ 18,653 Current state tax expense 3,305 2,671 1,146 Deferred federal tax expense 10,131 (6,329 ) 4,233 Deferred state tax expense 501 1,147 2,669 Income tax expense $ 28,306 $ 20,361 $ 26,701 Income tax expense for the years ended December 31, 2017, 2016 and 2015 differs from the amount determined by applying the statutory federal rate of 35% to income before income taxes as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Expense at federal tax rate $ 11,225 $ 17,381 $ 21,484 State taxes, net of federal income tax effect 1,831 2,679 3,235 Stock-based compensation 682 824 1,560 Non-deductible expenses 171 145 107 Effect of change in tax rate 15,117 – – Other (720 ) (668 ) 315 $ 28,306 $ 20,361 $ 26,701 For the year ended December 31, 2017, we recorded income tax expense of $28.3 million which includes $15.1 of income tax expense related to the effects of the Tax Act, which are required to be recorded in the period of enactment. Excluding the impact of the Tax Act, income tax expense for 2017 would have been $13.2 million. The tax effected cumulative temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows: December 31, 2017 2016 (In thousands) Deferred Tax Assets: Finance receivables $ 23,034 $ 28,986 Accrued liabilities 206 2,322 NOL carryforwards 529 1,697 Built in losses 5,277 8,915 Pension accrual 1,654 2,107 Stock compensation 3,642 – Other 582 2,343 Total deferred tax assets 34,924 46,370 $ Deferred Tax Liabilities: $ Deferred loan costs (2,233 ) (3,223 ) Furniture and equipment (245 ) (302 ) Total deferred tax liabilities (2,478 ) (3,525 ) $ Net deferred tax asset $ 32,446 $ 42,845 We acquired certain net operating losses and built-in loss assets as part of our acquisitions of MFN Financial Corp. (“MFN”) in 2002 and TFC Enterprises, Inc. (“TFC”) in 2003. Moreover, both MFN and TFC have undergone an ownership change for purposes of Internal Revenue Code (“IRC”) Section 382. In general, IRC Section 382 imposes an annual limitation on the ability of a loss corporation (that is, a corporation with a net operating loss (“NOL”) carryforward, credit carryforward, or certain built-in losses (“BILs”)) to utilize its pre-change NOL carryforwards or BILs to offset taxable income arising after an ownership change. In determining the possible future realization of deferred tax assets, we have considered future taxable income from the following sources: (a) reversal of taxable temporary differences; and (b) tax planning strategies that, if necessary, would be implemented to accelerate taxable income into years in which net operating losses might otherwise expire. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. A valuation allowance is recognized for a deferred tax asset if, based on the weight of the available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. In making such judgements, significant weight is given to evidence that can be objectively verified. Although realization is not assured, we believe that the realization of the recognized net deferred tax asset of $32.4 million as of December 31, 2017 is more likely than not based on forecasted future net earnings. Our net deferred tax asset of $32.4 million consists of approximately $22.8 million of net U.S. federal deferred tax assets and $9.6 million of net state deferred tax assets. The major components of the deferred tax asset are $5.8 million in net operating loss carryforwards and built in losses and $23.2 million in net deductions which have not yet been taken on a tax return. As of December 31, 2017, we had net operating loss carryforwards for state income tax purposes of $12.3 million. These state net operating losses begin to expire in 2018. We recognize a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. We recognize potential interest and penalties related to unrecognized tax benefits as income tax expense. At December 31, 2017, we had no unrecognized tax benefits for uncertain tax positions. We are subject to taxation in the US and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2014. |
10. Related Party Transactions
10. Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (10) Related Party Transactions In December 2007, one of our directors purchased a $4.0 million subordinated renewable note pursuant to our ongoing program of issuing such notes to the public. The note was purchased through the registered agent and under the same terms and conditions, including the interest rate, that were offered to other purchasers at the time the note was issued. As of December 31, 2017, $4.0 million remains outstanding on this note. |
11. Commitments and Contingenci
11. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (11) Commitments and Contingencies Leases The Company leases its facilities and certain computer equipment under non-cancelable operating leases, which expire through 2025. Future minimum lease payments at December 31, 2017, under these leases are due during the years ended December 31 as follows: Amount (In thousands) 2018 $ 6,493 2019 6,790 2020 6,710 2021 6,858 2022 5,465 Thereafter 1,616 Total minimum lease payments $ 33,932 Rent expense for the years ended December 31, 2017, 2016 and 2015, was $6.3 million, $5.2 million and $4.1 million, respectively. Our facility leases contain certain rental concessions and escalating rental payments, which are recognized as adjustments to rental expense and are amortized on a straight-line basis over the terms of the leases. Legal Proceedings Consumer Litigation. For the most part, we have legal and factual defenses to consumer claims, which we routinely contest or settle (for immaterial amounts) depending on the particular circumstances of each case. Department of Justice Industry Inquiry. Although the inquiry commenced January 2015 is thus completed as to us, no assurance can be given as to whether some other government agency may commence inquiries into or actions against us, nor as to whether the DOJ may recommence its investigation, any of which hypothetical proceedings might materially and adversely affect us. In General Accordingly, we believe that the ultimate resolution of such legal proceedings and contingencies 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, the wide discretion vested in the DOJ and other government agencies, and the deference that courts may give to assertions made by government litigants, there can be no assurance that the ultimate resolution of these matters will not 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. |
12. Employee Benefits
12. Employee Benefits | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefits | |
Employee Benefits | (12) Employee Benefits We sponsor a pretax savings and profit sharing plan (the “401(k) Plan”) qualified under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, eligible employees are able to contribute up to the maximum allowed under the law. We may, at our discretion, match 100% of employees’ contributions up to $2,000 per employee per calendar year. Our matching contributions to the 401(k) Plan were $1.2 million, $929,000, and $838,000, respectively, for the years ended December 31, 2017, 2016 and 2015. We also sponsor a defined benefit plan, the MFN Financial Corporation Pension Plan (the “Plan”). The Plan benefits were frozen on June 30, 2001. The following tables represents a reconciliation of the change in the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2017 and 2016: December 31, 2017 2016 (In thousands) Change in Projected Benefit Obligation Projected benefit obligation, beginning of year $ 21,515 $ 21,385 Service cost – – Interest cost 855 882 Assumption changes 1,535 95 Actuarial (gain) loss (298 ) 89 Settlements – – Benefits paid (1,045 ) (936 ) Projected benefit obligation, end of year $ 22,562 $ 21,515 Change in Plan Assets Fair value of plan assets, beginning of year $ 16,243 $ 16,374 Return on assets 1,508 1,031 Employer contribution – – Expenses (260 ) (226 ) Settlements – – Benefits paid (1,045 ) (936 ) Fair value of plan assets, end of year $ 16,446 $ 16,243 Funded Status at end of year $ (6,116 ) $ (5,272 ) Additional Information Weighted average assumptions used to determine benefit obligations and cost at December 31, 2017 and 2016 were as follows: December, 31 2017 2016 Weighted average assumptions used to determine benefit obligations Discount rate 3.50% 4.05% Weighted average assumptions used to determine net periodic benefit cost Discount rate 4.05% 4.20% Expected return on plan assets 7.25% 7.50% Our overall expected long-term rate of return on assets is 7.25% per annum as of December 31, 2017. The expected long-term rate of return is based on the weighted average of historical returns on individual asset categories, which are described in more detail below. December 31, 2017 2016 2015 (In thousands) Amounts recognized on Consolidated Balance Sheet Other assets $ – $ – $ – Other liabilities (6,116 ) (5,272 ) (5,011 ) Net amount recognized $ (6,116 ) $ (5,272 ) $ (5,011 ) Amounts recognized in accumulated other comprehensive loss consists of: Net loss $ 11,350 $ 10,618 $ 10,592 Unrecognized transition asset – – – Net amount recognized $ 11,350 $ 10,618 $ 10,592 Components of net periodic benefit cost Interest cost $ 855 $ 882 $ 843 Expected return on assets (1,149 ) (1,199 ) (1,508 ) Amortization of transition asset – – – Amortization of net loss 405 553 349 Net periodic benefit cost 111 236 (316 ) Settlement (gain)/loss – – – Total $ 111 $ 236 $ (316 ) Benefit Obligation Recognized in Other Comprehensive Loss (Income) Net loss (gain) $ 732 $ 25 $ 2,615 Prior service cost (credit) – – – Amortization of prior service cost – – – Net amount recognized in other comprehensive loss (income) $ 732 $ 25 $ 2,615 The estimated net loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2018 is $443,000. The weighted average asset allocation of our pension benefits at December 31, 2017 and 2016 were as follows: December 31, 2017 2016 Weighted Average Asset Allocation at Year-End Asset Category Equity securities 83% 85% Debt securities 17% 15% Cash and cash equivalents 0% 0% Total 100% 100% Our investment policies and strategies for the pension benefits plan utilize a target allocation of 75% equity securities and 25% fixed income securities (excluding Company stock). Our investment goals are to maximize returns subject to specific risk management policies. We address risk management and diversification by the use of a professional investment advisor and several sub-advisors which invest in domestic and international equity securities and domestic fixed income securities. Each sub-advisor focuses its investments within a specific sector of the equity or fixed income market. For the sub-advisors focused on the equity markets, the sectors are differentiated by the market capitalization, the relative valuation and the location of the underlying issuer. For the sub-advisors focused on the fixed income markets, the sectors are differentiated by the credit quality and the maturity of the underlying fixed income investment. The investments made by the sub-advisors are readily marketable and can be sold to fund benefit payment obligations as they become payable. Cash Flows Estimated Future Benefit Payments (In thousands) 2018 $ 822 2019 854 2020 895 2021 936 2022 981 Years 2023 - 2027 5,449 Anticipated Contributions in 2018 $ – The fair value of plan assets at December 31, 2017 and 2016, by asset category, is as follows: December 31, 2017 Level 1 (1) Level 2 (2) Level 3 (3) Total Investment Name: (in thousands) Company Common Stock $ 3,633 $ – $ – $ 3,633 Large Cap Value – 2,324 – 2,324 Mid Cap Index – 654 – 654 Small Cap Growth – 657 – 657 Small Cap Value – 647 – 647 Large Cap Blend – 661 – 661 Growth – 2,313 – 2,313 International Growth – 2,683 – 2,683 Core Bond – 1,870 – 1,870 High Yield – 373 – 373 Inflation Protected Bond – 505 – 505 Money Market – 126 – 126 Total $ 3,633 $ 12,813 $ – $ 16,446 December 31, 2016 Level 1 (1) Level 2 (2) Level 3 (3) Total Investment Name: (in thousands) Company Common Stock $ 4,581 $ – $ – $ 4,581 Large Cap Value – 2,238 – 2,238 Mid Cap Index – 625 – 625 Small Cap Growth – 621 – 621 Small Cap Value – 687 – 687 Focus Value – 676 – 676 Growth – 1,980 – 1,980 International Growth – 2,392 – 2,392 Core Bond – 1,644 – 1,644 High Yield – 356 – 356 Inflation Protected Bond – 433 – 433 Money Market – 10 – 10 Total $ 4,581 $ 11,662 $ – $ 16,243 _______________________ (1) Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. (2) All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. (3) There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs. |
13. Fair Value Measurements
13. Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | (13) 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 are 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. Repossessed vehicle inventory, which is included in Other assets on our consolidated balance sheet, is measured at fair value using level 2 assumptions based on our actual loss experience on sale of repossessed vehicles. At December 31, 2017, the finance receivables related to the repossessed vehicles in inventory totaled $33.7 million. We have applied a valuation adjustment, or loss allowance, of $24.0 million, which is based on a recovery rate of approximately 29%, resulting in an estimated fair value and carrying amount of $9.7 million. The fair value and carrying amount of the repossessed inventory at December 31, 2016 was $11.1 million after applying a valuation adjustment of $28.9 million. There were no transfers in or out of level 1 or level 2 assets and liabilities for 2017 and 2016. We have no level 3 assets or liabilities that are measured at fair value on a non-recurring basis. The estimated fair values of financial assets and liabilities at December 31, 2017 and 2016, were as follows: As of December 31, 2017 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 12,731 $ 12,731 $ – $ – $ 12,731 Restricted cash and equivalents 111,965 111,965 – – 111,965 Finance receivables, net 2,195,797 – – 2,171,846 2,171,846 Accrued interest receivable 46,753 – – 46,753 46,753 Liabilities: Warehouse lines of credit $ 112,408 $ – $ – $ 112,408 $ 112,408 Accrued interest payable 4,212 – – 4,212 4,212 Securitization trust debt 2,083,215 – – 2,089,678 2,089,678 Subordinated renewable notes 16,566 – – 16,566 16,566 As of December 31, 2016 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 13,936 $ 13,936 $ – $ – $ 13,936 Restricted cash and equivalents 112,754 112,754 – – 112,754 Finance receivables, net 2,172,365 – – 2,104,503 2,104,503 Accrued interest receivable 36,233 – – 36,233 36,233 Liabilities: Warehouse lines of credit $ 103,358 $ – $ – $ 103,358 $ 103,358 Accrued interest payable 3,715 – – 3,715 3,715 Securitization trust debt 2,080,900 – – 2,138,892 2,138,892 Subordinated renewable notes 14,949 – – 14,949 14,949 The following summary presents a description of the methodologies and assumptions used to estimate the fair value of our financial instruments. Much of the information used to determine fair value is highly subjective. When applicable, readily available market information has been utilized. However, for a significant portion of our financial instruments, active markets do not exist. Therefore, significant elements of judgment were required in estimating fair value for certain items. The subjective factors include, among other things, the estimated timing and amount of cash flows, risk characteristics, credit quality and interest rates, all of which are subject to change. Since the fair value is estimated as of December 31, 2017 and 2016, 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. Accrued Interest Receivable and Payable The carrying value approximates fair value. Warehouse Lines of Credit, Residual Interest Financing, 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. |
14. Quarterly Financial Data (U
14. Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | (14) Quarterly Financial Data (unaudited) Quarter Ended March 31, June 30, September 30, December 31, (In thousands, except per share data) 2017 Revenues $ 107,598 $ 110,072 $ 109,488 $ 107,225 Income before income tax expense 7,792 7,952 8,109 8,217 Net income (loss) 4,480 4,572 4,663 (9,951 ) Earnings (loss) per share: Basic $ 0.19 $ 0.20 $ 0.21 $ (0.46 ) Diluted 0.16 0.17 0.17 (0.46 ) 2016 Revenues $ 100,649 $ 104,933 $ 108,516 $ 108,183 Income before income tax expense 12,229 12,325 12,455 12,651 Net income 7,214 7,272 7,348 7,465 Earnings per share: Basic $ 0.29 $ 0.30 $ 0.31 $ 0.31 Diluted 0.24 0.25 0.26 0.26 2015 Revenues $ 85,989 $ 88,361 $ 93,991 $ 95,308 Income before income tax expense 14,749 15,200 15,649 15,783 Net income 8,333 8,537 8,843 8,967 Earnings per share: Basic $ 0.33 $ 0.33 $ 0.34 $ 0.35 Diluted 0.26 0.27 0.28 0.29 |
15. Subsequent Events
15. Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | (15) Subsequent Events On January 16, 2018 we executed our first securitization of 2018. In the transaction, qualified institutional buyers purchased $190.0 million of asset-backed notes secured by $193.6 million in automobile receivables purchased by us. The sold notes, issued by CPS Auto Receivables Trust 2018-A, consist of five classes. Ratings of the notes were provided by Standard & Poor’s, and DBRS and were based on the structure of the transaction, the historical performance of similar receivables and our experience as a servicer. The weighted average yield on the notes is approximately 3.46%. The 2018-A transaction has initial credit enhancement consisting of a cash deposit equal to 1.00% of the original receivable pool balance. The final enhancement level requires accelerated payment of principal on the notes to reach overcollateralization of the lesser of 6.80% of the original receivable pool balance, or 18.50% of the then outstanding pool balance. The transaction utilizes a pre-funding structure, in which CPS sold approximately $121.3 million of receivables on January 16, 2018 and sold $72.3 million of additional receivables on February 9, 2018. The transaction was a private offering of securities, not registered under the Securities Act of 1933, or any state securities law. |
1. Summary of Significant Acc24
1. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Consumer Portfolio Services, Inc. ("CPS") was incorporated in California on March 8, 1991. CPS and its subsidiaries (collectively, the "Company") specialize in purchasing and servicing retail automobile installment sale contracts ("Contracts") originated by licensed motor vehicle dealers ("Dealers") located throughout the United States. Dealers located in Texas, Ohio, California, Florida and North Carolina represented 7.4%, 7.4%, 7.1%, 5.9% and 5.8%, respectively, of contracts purchased during 2017 compared with 7.3%, 6.8%, 7.2%, 5.6% and 5.3% respectively in 2016. No other state had a concentration in excess of 5.8% in 2017. We specialize in contracts with vehicle purchasers who generally would not be expected to qualify for traditional financing provided by commercial banks or automobile manufacturers’ captive finance companies. We are subject to various regulations and laws as they relate to the extension of credit in consumer credit transactions. Failure to comply with such laws and regulations could have a material adverse effect on the Company. |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of Consumer Portfolio Services, Inc. and its wholly-owned subsidiaries, certain of which are special purpose subsidiaries ("SPS"), formed to accommodate the structures under which we purchase and securitize our contracts. The Consolidated Financial Statements also include the accounts of CPS Leasing, Inc., an 80% owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of cash on hand and due from banks and money market accounts. Substantially all of our cash is deposited at three financial institutions. We maintain cash due from banks in excess of the banks' insured deposit limits. We do not believe we are exposed to any significant credit risk on these deposits. As part of certain financial covenants related to debt facilities, we are required to maintain a minimum unrestricted cash balance. As of December 31, 2017, our unrestricted cash balance was $12.7 million, which exceeded the minimum amounts required by our financial covenants. |
Finance Receivables | Finance Receivables Finance receivables, which we have the intent and ability to hold for the foreseeable future or until maturity or payoff, are presented at cost. All finance receivable contracts are held for investment. Interest income is accrued on the unpaid principal balance. Origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Generally, payments received on finance receivables are restricted to certain securitized pools, and the related contracts cannot be resold. Finance receivables are charged off pursuant to the controlling documents of certain securitized pools, generally as described below under Charge Off Policy. Management may authorize an extension of payment terms if collection appears likely during the next calendar month. Our portfolio of finance receivables consists of small-balance homogeneous contracts that are collectively evaluated for impairment on a portfolio basis. We report delinquency on a contractual basis. Once a Contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the Contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a Contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. |
Allowance for Finance Credit Losses | Allowance for Finance Credit Losses In order to estimate an appropriate allowance for losses likely incurred on finance receivables, we use a loss allowance methodology commonly referred to as "static pooling," which stratifies the finance receivable portfolio into separately identified pools based on their period of origination, then uses historical performance of seasoned pools to estimate future losses on current pools. Historical loss experience is adjusted as necessary for current economic conditions. We consider our portfolio of finance receivables to be relatively homogenous and consequently we analyze credit performance primarily in the aggregate rather than stratification by any particular credit quality indicator. Using analytical and formula driven techniques, we estimate an allowance for finance credit losses, which we believe is adequate for probable incurred credit losses that can be reasonably estimated in our portfolio of finance receivable contracts. For each monthly pool of contracts that we purchase, we begin establishing the allowance in the month of acquisition and increase it over the subsequent 11 months, through a provision for credit losses charged to our Consolidated Statement of Income. Net losses incurred on finance receivables are charged to the allowance. We evaluate the adequacy of the allowance by examining current delinquencies, the characteristics of the portfolio, the value of the underlying collateral and historical loss trends. As conditions change, our level of provisioning and/or allowance may change. |
Charge Off Policy | Charge Off Policy Delinquent contracts for which the related financed vehicle has been repossessed are generally charged off at the earliest of (1) the month in which the proceeds from the sale of the financed vehicle are received, (2) the month in which 90 days have passed from the date of repossession or (3) the month in which the Contract becomes seven scheduled payments past due (see Repossessed and Other Assets below). The amount charged off is the remaining principal balance of the Contract, after the application of the net proceeds from the liquidation of the financed vehicle. With respect to delinquent contracts for which the related financed vehicle has not been repossessed, the remaining principal balance is generally charged off no later than the end of the month that the Contract becomes five scheduled payments past due. |
Contract Acquisition Fees and Origination Costs | Contract Acquisition Fees and Origination Costs Upon purchase of a Contract from a Dealer, we generally either charge or advance the Dealer an acquisition fee. Dealer acquisition fees and deferred origination costs are applied to the carrying value of finance receivables and are accreted into earnings as an adjustment to the yield over the estimated life of the Contract using the interest method. |
Repossessed and Other Assets | Repossessed and Other Assets If a Contract obligor fails to make or keep promises for payments, or if the obligor is uncooperative or attempts to evade contact or hide the vehicle, a supervisor will review the collection activity relating to the account to determine if repossession of the vehicle is warranted. Generally, such a decision is made between the 60th and 90th day past the obligor’s payment due date, but could occur sooner or later, depending on the specific circumstances. At the time the vehicle is repossessed we stop accruing interest on the Contract, and reclassify the remaining Contract balance to the line item "Other Assets" on our Consolidated Balance Sheet at its estimated fair value less costs to sell. Included in other assets in the accompanying Consolidated Balance Sheets are repossessed vehicles pending sale of $9.7 million and $11.1 million at December 31, 2017 and 2016, respectively. |
Treatment of Securitizations | Treatment of Securitizations Our term securitization structure has generally been as follows: We sell contracts we acquire to a wholly-owned SPS, which has been established for the limited purpose of buying and reselling our contracts. The SPS then transfers the same contracts to another entity, typically a statutory trust ("Trust"). The Trust issues interest-bearing asset-backed securities ("Notes"), in a principal amount equal to or less than the aggregate principal balance of the contracts. We typically sell these contracts to the Trust at face value and without recourse, except representations and warranties that we make to the Trust that are similar to those provided to us by the Dealer. One or more investors (the "Noteholders") purchase the Notes issued by the Trust; the proceeds from the sale of the Notes are then used to purchase the contracts from us. We may retain or sell subordinated Notes issued by the Trust. In addition, we have provided "Credit Enhancement" for the benefit of the Noteholders in three forms: (1) an initial cash deposit to a bank account (a "Spread Account") held by the Trust, (2) overcollateralization of the Notes, where the principal balance of the Notes issued is less than the principal balance of the contracts, and (3) in the form of subordinated Notes. The agreements governing the securitization transactions (collectively referred to as the "Securitization Agreements") require that the initial level of Credit Enhancement be supplemented by a portion of collections from the contracts until the level of Credit Enhancement reaches specified levels, which are then maintained. The specified levels are generally computed as a percentage of the principal amount remaining unpaid under the related contracts. The specified levels at which the Credit Enhancement is to be maintained will vary depending on the performance of the portfolios of contracts held by the Trusts and on other conditions. Such levels have increased and decreased from time to time based on performance of the various portfolios, and have also varied from one Trust to another. Our warehouse securitization structures are similar to the above, except that (i) the SPS that purchases the contracts pledges the contracts to secure promissory notes or loans that it issues, and (ii) no increase in the required amount of Credit Enhancement is contemplated. Upon each sale of contracts in a securitization structured as a secured financing, we retain as assets on our Consolidated Balance Sheet the securitized contracts and record as indebtedness the Notes issued in the transaction. We have the power to direct the most significant activities of the SPS. In addition, we have the obligation to absorb losses and the rights to receive benefits from the SPS, both of which could be potentially significant to the SPS. These types of securitization structures are treated as secured financings, in which the receivables remain on our Consolidated Balance Sheet, and the debt issued by the SPS is shown as a securitization trust debt on our Consolidated Balance Sheet. We receive periodic base servicing fees for the servicing and collection of the contracts. In addition, we are entitled to the cash flows from the Trusts that represent collections on the contracts in excess of the amounts required to pay principal and interest on the Notes, the base servicing fees, and certain other fees (such as trustee and custodial fees). Required principal payments on the Notes are generally defined as the payments sufficient to keep the principal balance of the Notes equal to the aggregate principal balance of the related contracts (excluding those contracts that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related Securitization Agreements require accelerated payment of principal until the principal balance of the Notes is reduced to the specified percentage. Such accelerated principal payment is said to create "overcollateralization" of the Notes. If the amount of cash required for payment of fees, interest and principal on the senior Notes exceeds the amount collected during the collection period, the shortfall is generally withdrawn from the Spread Account, if any. If the cash collected during the period exceeds the amount necessary for the above allocations plus required principal payments on the subordinated Notes, if any, and there is no shortfall in the related Spread Account or other form of Credit Enhancement, the excess is released to us. If the total Credit Enhancement amount is not at the required level, then the excess cash collected is retained in the Trust until the specified level is achieved. Cash in the Spread Accounts is restricted from our use. Cash held in the various Spread Accounts is invested in high quality, liquid investment securities, as specified in the Securitization Agreements. In all of our term securitizations we have transferred the receivables (through a subsidiary) to the securitization Trust. We report the assets and liabilities of the securitization Trust on our Consolidated Balance Sheet. The Noteholders’ and the related securitization Trusts’ recourse against us for failure of the contract obligors to make payments on a timely basis is limited, in general, to our Finance Receivables, and Spread Accounts. |
Servicing | Servicing We consider the contractual servicing fee received on our managed portfolio held by non-consolidated subsidiaries to be equal to adequate compensation. Additionally, we consider that these fees would fairly compensate a substitute servicer, should one be required. As a result, no servicing asset or liability has been recognized. Servicing fees received on the managed portfolio held by non-consolidated subsidiaries are reported as income when earned. Servicing fees received on the managed portfolio held by consolidated subsidiaries are included in interest income when earned. Servicing costs are charged to expense as incurred. Servicing fees receivable, which are included in Other Assets in the accompanying Consolidated Balance Sheets, represent fees earned but not yet remitted to us by the trustee. |
Furniture and Equipment | Furniture and Equipment Furniture and equipment are stated at cost net of accumulated depreciation. We calculate depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Assets held under capital leases and leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related lease terms. Amortization expense on assets acquired under capital lease is included with depreciation expense on owned assets. |
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of | Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. |
Other Income | Other Income The following table presents the primary components of Other Income: Year Ended December 31, 2017 2016 2015 (In thousands) Direct mail revenues $ 6,432 $ 9,202 $ 8,927 Convenience fee revenue 1,900 2,145 2,610 Recoveries on previously charged-off contracts 563 766 1,079 Sales tax refunds 866 811 616 Other 448 362 506 $ 10,209 $ 13,286 $ 13,738 |
Earnings Per Share | Earnings Per Share The following table illustrates the computation of basic and diluted earnings per share: Year Ended December 31, 2017 2016 2015 (In thousands, except per share data) Numerator: Numerator for basic and diluted earnings per share $ 3,765 $ 29,300 $ 34,681 Denominator: Denominator for basic earnings per share - weighted average number of common shares outstanding during the year 22,687 24,356 25,935 Incremental common shares attributable to exercise of outstanding options and warrants 4,527 4,679 5,649 Denominator for diluted earnings per share 27,214 29,035 31,584 Basic earnings per share $ 0.17 $ 1.20 $ 1.34 Diluted earnings per share $ 0.14 $ 1.01 $ 1.10 Incremental shares of 7.5 million, 7.9 million and 6.8 million related to stock options and warrants have been excluded from the diluted earnings per share calculation for the years ended December 31, 2017, 2016 and 2015, respectively, because the effect is anti-dilutive. |
Deferral and Amortization of Debt Issuance Costs | Deferral and Amortization of Debt Issuance Costs Costs related to the issuance of debt are deferred and amortized using the interest method over the contractual or expected term of the related debt. Unamortized debt issuance costs are presented as a direct deduction to the carrying amount of the related debt on our Consolidated Balance Sheets. |
Income Taxes | Income Taxes The Company and its subsidiaries file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain states. We utilize the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the future tax consequences attributable to the differences between the financial statement values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We estimate a valuation allowance against that portion of the deferred tax asset whose utilization in future periods is not more than likely. |
Purchases of Company Stock | Purchases of Company Stock We record purchases of our own common stock at cost and treat the shares as retired. |
Stock Option Plan | Stock Option Plan We recognize compensation costs in the financial statements based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. Compensation cost is recognized over the required service period, generally defined as the vesting period. |
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. These material estimates that could be susceptible to changes in the near term and, accordingly, actual results could differ from those estimates. |
Reclassification | Reclassification Certain amounts for the prior year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’ equity. |
Financial Covenants | Financial Covenants Certain of our securitization transactions, our residual interest financing and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2017 we were in compliance with all such financial covenants. |
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. We have recorded a liability as of December 31, 2017, which represents our best estimate of the immaterial aggregate probable incurred losses for legal contingencies. The amount of losses that may ultimately be incurred, over and above such losses as are probable, cannot be estimated with certainty. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2018, as a result of the enactment of the Tax Cuts and Jobs Act (the Tax Act), the FASB issued new accounting guidance on the reclassification of certain tax effects from accumulated other comprehensive income to retained earnings. The guidance is effective January 1, 2019, with early adoption permitted. The Company is evaluating the new guidance along with any impact on the Company’s financial position, results of operations and cash flows, none of which are expected to be material. In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The revised accounting guidance changes the criteria under which credit losses are measured. The amendment introduces a new credit reserving model known as the Current Expected Credit Loss (CECL) model, which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to establish credit loss estimates. This new accounting guidance will be effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the provisions of ASU No. 2016-13, however, it is expected that the new CECL model will alter the assumptions used in calculating the Company's credit losses, given the change to estimated losses for the estimated life of the financial asset, and will likely result in a material effect on the Company’s financial position and results of operations. In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), superseding the revenue recognition requirements in ASC 605. This ASU requires an entity to recognize revenue for 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 amendment includes a five-step process to assist an entity in achieving the main principle(s) of revenue recognition under ASC 605. The Company has adopted this ASU in the first quarter of 2018 and expects the new guidance will not have a material effect on its financial position, results of operations and cash flows. |
1. Summary of Significant Acc25
1. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of other income | The following table presents the primary components of Other Income: Year Ended December 31, 2017 2016 2015 (In thousands) Direct mail revenues $ 6,432 $ 9,202 $ 8,927 Convenience fee revenue 1,900 2,145 2,610 Recoveries on previously charged-off contracts 563 766 1,079 Sales tax refunds 866 811 616 Other 448 362 506 $ 10,209 $ 13,286 $ 13,738 |
Schedule of computation of earnings per share | The following table illustrates the computation of basic and diluted earnings per share: Year Ended December 31, 2017 2016 2015 (In thousands, except per share data) Numerator: Numerator for basic and diluted earnings per share $ 3,765 $ 29,300 $ 34,681 Denominator: Denominator for basic earnings per share - weighted average number of common shares outstanding during the year 22,687 24,356 25,935 Incremental common shares attributable to exercise of outstanding options and warrants 4,527 4,679 5,649 Denominator for diluted earnings per share 27,214 29,035 31,584 Basic earnings per share $ 0.17 $ 1.20 $ 1.34 Diluted earnings per share $ 0.14 $ 1.01 $ 1.10 |
3. Finance Receivables (Tables)
3. Finance Receivables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Finance Receivables | |
Schedule of finance receivables | The following table presents the components of finance receivables, net of unearned interest: December 31, 2017 2016 Finance receivables (In thousands) Automobile finance receivables, net of unearned interest $ 2,298,608 $ 2,266,619 Unearned acquisition fees, discounts and deferred origination costs, net 6,376 1,324 Finance receivables $ 2,304,984 $ 2,267,943 |
Schedule of delinquency status of finance receivables | The following table summarizes the delinquency status of finance receivables as of December 31, 2017 and 2016: December 31, 2017 2016 (In thousands) Delinquency Status Current $ 2,069,617 $ 2,053,759 31 - 60 days 138,395 116,073 61 - 90 days 63,081 52,404 91 + days 27,515 44,383 $ 2,298,608 $ 2,266,619 |
Schedule of allowance for credit losses | The following table presents a summary of the activity for the allowance for finance credit losses, for the years ended December 31, 2017, 2016 and 2015: December 31, 2017 2016 2015 (In thousands) Balance at beginning of year $ 95,578 $ 75,603 $ 61,460 Provision for credit losses 186,713 178,511 142,618 Charge-offs (211,948 ) (192,366 ) (156,553 ) Recoveries 38,844 33,830 28,078 Balance at end of year $ 109,187 $ 95,578 $ 75,603 |
Schedule of allowance for losses on repossessed inventory | The following table presents a summary of such repossessed inventory together with the allowance for losses on repossessed inventory: December 31, 2017 2016 (In thousands) Gross balance of repossessions in inventory $ 33,679 $ 40,069 Allowance for losses on repossessed inventory (24,024 ) (28,924 ) Net repossessed inventory included in other assets $ 9,655 $ 11,145 |
4. Furniture and Equipment (Tab
4. Furniture and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of furniture and equipment | The following table presents the components of furniture and equipment: December 31, 2017 2016 (In thousands) Furniture and fixtures $ 1,566 $ 1,566 Computer and telephone equipment 5,470 4,907 Leasehold improvements 1,260 1,154 8,296 7,627 Less: accumulated depreciation and amortization (6,544 ) (5,610 ) $ 1,752 $ 2,017 |
5. Securitization Trust Debt (T
5. Securitization Trust Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Securitization Trust Debt | |
Schedule of securitization trust debt | The debt issued in these transactions is shown on our Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table: Series Final Scheduled Payment Date (1) Receivables Pledged at December 31, 2017 (2) Initial Principal Outstanding Principal at December 31, 2017 Outstanding Principal at December 31, 2016 Weighted Average Interest Rate at December 31, 2017 (Dollars in thousands) CPS 2012-C December 2019 – 147,000 – 14,421 – CPS 2012-D March 2020 – 160,000 – 17,865 – CPS 2013-A June 2020 – 185,000 – 28,661 – CPS 2013-B September 2020 21,251 205,000 18,407 37,570 2.09% CPS 2013-C December 2020 26,518 205,000 25,559 46,830 5.88% CPS 2013-D March 2021 26,921 183,000 24,917 46,345 5.11% CPS 2014-A June 2021 33,120 180,000 30,521 54,988 4.33% CPS 2014-B September 2021 46,600 202,500 44,516 75,140 3.67% CPS 2014-C December 2021 73,634 273,000 71,174 116,280 3.87% CPS 2014-D March 2022 80,784 267,500 79,099 127,307 4.17% CPS 2015-A June 2022 89,171 245,000 87,194 134,466 3.73% CPS 2015-B September 2022 104,354 250,000 102,873 153,893 3.63% CPS 2015-C December 2022 142,703 300,000 141,362 207,636 4.15% CPS 2016-A March 2023 182,657 329,460 180,761 262,260 4.45% CPS 2016-B June 2023 206,881 332,690 201,199 284,752 4.50% CPS 2016-C September 2023 208,815 318,500 203,504 285,618 4.06% CPS 2016-D April 2024 153,671 206,325 149,671 200,221 3.14% CPS 2017-A April 2024 166,693 206,320 161,892 – 3.31% CPS 2017-B December 2023 198,860 225,170 186,594 – 2.90% CPS 2017-C September 2024 207,158 224,825 197,155 – 2.83% CPS 2017-D June 2024 193,957 196,300 189,277 – 2.74% $ 2,163,746 $ 4,842,590 $ 2,095,675 $ 2,094,253 ____________________ (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 $873.7 million in 2018, $612.3 million in 2019, $362.5 million in 2020, $179.3 million in 2021, $49.5 million in 2022, and $5.9 million in 2023. (2) Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets. |
6. Debt (Tables)
6. Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of debt outstanding | The terms of our debt outstanding at December 31, 2017 and 2016 are summarized below: Amount Outstanding at December 31, December 31, 2017 2016 (In thousands) Description Interest Rate Revolving Maturity Warehouse lines of credit 5.50% over one month Libor (Minimum 6.50%) April 2019 $ 25,629 $ 64,352 5.50% over one month Libor (Minimum 6.25%) August 2018 77,546 26,445 6.75% over a commercial paper rate (Minimum 7.75%) November 2019 11,100 14,168 Subordinated renewable notes Weighted average rate of 7.99% and 7.50% at December 31, 2017 and 2016, respectively Weighted average maturity of March 2020 and January 2019 at December 31, 2017 and 2016, respectively 16,566 14,949 $ 130,841 $ 119,914 |
Schedule of expected maturity amounts for long-term debt | The following table summarizes the contractual and expected maturity amounts of long term debt as of December 31, 2017: Contractual maturity date Subordinated renewable notes 2018 $ 8,406 2019 1,942 2020 2,616 2021 1,515 2022 458 Thereafter 1,629 Total $ 16,566 |
7. Shareholders' Equity (Tables
7. Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Schedule of assumptions for stock options | The dividend yield is estimated to be zero based on our intention not to issue dividends for the foreseeable future. Year Ended December 31, 2017 2016 2015 Expected life (years) 4.02 4.04 4.21 Risk-free interest rate 1.59% 1.09% 1.35% Volatility 36% 51% 51% Expected dividend yield – – – |
Schedule of option activity | Stock option activity for the year ended December 31, 2017 for stock options under the 2006 and 1997 plans is as follows: Number of Shares (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term Options outstanding at the beginning of period 12,595 $ 4.56 N/A Granted 1,470 4.35 N/A Exercised (647 ) 1.68 N/A Forfeited/Expired (283 ) 5.62 N/A Options outstanding at the end of period 13,135 $ 4.66 4.45 years Options exercisable at the end of period 8,789 $ 4.51 4.04 years |
8. Interest Income and Intere31
8. Interest Income and Interest Expense (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Interest Income And Interest Expense | |
Schedule of interest income | The following table presents the components of interest income: Year Ended December 31, 2017 2016 2015 (In thousands) Interest on finance receivables $ 423,567 $ 408,723 $ 349,796 Other interest income 607 273 116 Interest income $ 424,174 $ 408,996 $ 349,912 |
Schedule of interest expense | The following table presents the components of interest expense: Year Ended December 31, 2017 2016 2015 (In thousands) Securitization trust debt $ 83,084 $ 69,178 $ 48,631 Warehouse lines of credit 7,933 8,569 6,127 Residual interest financing – 846 1,405 Subordinated renewable notes 1,328 1,348 1,582 Interest expense $ 92,345 $ 79,941 $ 57,745 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | Income taxes consist of the following: Year Ended December 31, 2017 2016 2015 (In thousands) Current federal tax expense $ 14,369 $ 22,872 $ 18,653 Current state tax expense 3,305 2,671 1,146 Deferred federal tax expense 10,131 (6,329 ) 4,233 Deferred state tax expense 501 1,147 2,669 Income tax expense $ 28,306 $ 20,361 $ 26,701 |
Schedule of reconciliation of income taxes | Income tax expense for the years ended December 31, 2017, 2016 and 2015 differs from the amount determined by applying the statutory federal rate of 35% to income before income taxes as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Expense at federal tax rate $ 11,225 $ 17,381 $ 21,484 State taxes, net of federal income tax effect 1,831 2,679 3,235 Stock-based compensation 682 824 1,560 Non-deductible expenses 171 145 107 Effect of change in tax rate 15,117 – – Other (720 ) (668 ) 315 $ 28,306 $ 20,361 $ 26,701 |
Schedule of deferred tax assets and liabilities | The tax effected cumulative temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows: December 31, 2017 2016 (In thousands) Deferred Tax Assets: Finance receivables $ 23,034 $ 28,986 Accrued liabilities 206 2,322 NOL carryforwards 529 1,697 Built in losses 5,277 8,915 Pension accrual 1,654 2,107 Stock compensation 3,642 – Other 582 2,343 Total deferred tax assets 34,924 46,370 $ Deferred Tax Liabilities: $ Deferred loan costs (2,233 ) (3,223 ) Furniture and equipment (245 ) (302 ) Total deferred tax liabilities (2,478 ) (3,525 ) $ Net deferred tax asset $ 32,446 $ 42,845 |
11. Commitments and Contingen33
11. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments | Future minimum lease payments at December 31, 2017, under these leases are due during the years ended December 31 as follows: Amount (In thousands) 2018 $ 6,493 2019 6,790 2020 6,710 2021 6,858 2022 5,465 Thereafter 1,616 Total minimum lease payments $ 33,932 |
12. Employee Benefits (Tables)
12. Employee Benefits (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefits | |
Schedule of reconciliation of the change in the plan's benefit obligations | The following tables represents a reconciliation of the change in the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2017 and 2016: December 31, 2017 2016 (In thousands) Change in Projected Benefit Obligation Projected benefit obligation, beginning of year $ 21,515 $ 21,385 Service cost – – Interest cost 855 882 Assumption changes 1,535 95 Actuarial (gain) loss (298 ) 89 Settlements – – Benefits paid (1,045 ) (936 ) Projected benefit obligation, end of year $ 22,562 $ 21,515 Change in Plan Assets Fair value of plan assets, beginning of year $ 16,243 $ 16,374 Return on assets 1,508 1,031 Employer contribution – – Expenses (260 ) (226 ) Settlements – – Benefits paid (1,045 ) (936 ) Fair value of plan assets, end of year $ 16,446 $ 16,243 Funded Status at end of year $ (6,116 ) $ (5,272 ) |
Schedule of weighted average assumptions used to determine pension benefit obligations | Weighted average assumptions used to determine benefit obligations and cost at December 31, 2017 and 2016 were as follows: December, 31 2017 2016 Weighted average assumptions used to determine benefit obligations Discount rate 3.50% 4.05% Weighted average assumptions used to determine net periodic benefit cost Discount rate 4.05% 4.20% Expected return on plan assets 7.25% 7.50% |
Schedule of components of net periodic benefit cost | December 31, 2017 2016 2015 (In thousands) Amounts recognized on Consolidated Balance Sheet Other assets $ – $ – $ – Other liabilities (6,116 ) (5,272 ) (5,011 ) Net amount recognized $ (6,116 ) $ (5,272 ) $ (5,011 ) Amounts recognized in accumulated other comprehensive loss consists of: Net loss $ 11,350 $ 10,618 $ 10,592 Unrecognized transition asset – – – Net amount recognized $ 11,350 $ 10,618 $ 10,592 Components of net periodic benefit cost Interest cost $ 855 $ 882 $ 843 Expected return on assets (1,149 ) (1,199 ) (1,508 ) Amortization of transition asset – – – Amortization of net loss 405 553 349 Net periodic benefit cost 111 236 (316 ) Settlement (gain)/loss – – – Total $ 111 $ 236 $ (316 ) Benefit Obligation Recognized in Other Comprehensive Loss (Income) Net loss (gain) $ 732 $ 25 $ 2,615 Prior service cost (credit) – – – Amortization of prior service cost – – – Net amount recognized in other comprehensive loss (income) $ 732 $ 25 $ 2,615 |
Schedule of weighted average asset allocation of our pension benefits | The weighted average asset allocation of our pension benefits at December 31, 2017 and 2016 were as follows: December 31, 2017 2016 Weighted Average Asset Allocation at Year-End Asset Category Equity securities 83% 85% Debt securities 17% 15% Cash and cash equivalents 0% 0% Total 100% 100% |
Schedule of estimated Future Benefit Payments | Estimated Future Benefit Payments (In thousands) 2018 $ 822 2019 854 2020 895 2021 936 2022 981 Years 2023 - 2027 5,449 Anticipated Contributions in 2018 $ – |
Schedule of fair value of plan assets | The fair value of plan assets at December 31, 2017 and 2016, by asset category, is as follows: December 31, 2017 Level 1 (1) Level 2 (2) Level 3 (3) Total Investment Name: (in thousands) Company Common Stock $ 3,633 $ – $ – $ 3,633 Large Cap Value – 2,324 – 2,324 Mid Cap Index – 654 – 654 Small Cap Growth – 657 – 657 Small Cap Value – 647 – 647 Large Cap Blend – 661 – 661 Growth – 2,313 – 2,313 International Growth – 2,683 – 2,683 Core Bond – 1,870 – 1,870 High Yield – 373 – 373 Inflation Protected Bond – 505 – 505 Money Market – 126 – 126 Total $ 3,633 $ 12,813 $ – $ 16,446 December 31, 2016 Level 1 (1) Level 2 (2) Level 3 (3) Total Investment Name: (in thousands) Company Common Stock $ 4,581 $ – $ – $ 4,581 Large Cap Value – 2,238 – 2,238 Mid Cap Index – 625 – 625 Small Cap Growth – 621 – 621 Small Cap Value – 687 – 687 Focus Value – 676 – 676 Growth – 1,980 – 1,980 International Growth – 2,392 – 2,392 Core Bond – 1,644 – 1,644 High Yield – 356 – 356 Inflation Protected Bond – 433 – 433 Money Market – 10 – 10 Total $ 4,581 $ 11,662 $ – $ 16,243 ______________________ (1) Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. (2) All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. (3) There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs. |
13. Fair Value Measurements (Ta
13. Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of estimated fair values of financial assets and liabilities | The estimated fair values of financial assets and liabilities at December 31, 2017 and 2016, were as follows: As of December 31, 2017 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 12,731 $ 12,731 $ – $ – $ 12,731 Restricted cash and equivalents 111,965 111,965 – – 111,965 Finance receivables, net 2,195,797 – – 2,171,846 2,171,846 Accrued interest receivable 46,753 – – 46,753 46,753 Liabilities: Warehouse lines of credit $ 112,408 $ – $ – $ 112,408 $ 112,408 Accrued interest payable 4,212 – – 4,212 4,212 Securitization trust debt 2,083,215 – – 2,089,678 2,089,678 Subordinated renewable notes 16,566 – – 16,566 16,566 As of December 31, 2016 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 13,936 $ 13,936 $ – $ – $ 13,936 Restricted cash and equivalents 112,754 112,754 – – 112,754 Finance receivables, net 2,172,365 – – 2,104,503 2,104,503 Accrued interest receivable 36,233 – – 36,233 36,233 Liabilities: Warehouse lines of credit $ 103,358 $ – $ – $ 103,358 $ 103,358 Accrued interest payable 3,715 – – 3,715 3,715 Securitization trust debt 2,080,900 – – 2,138,892 2,138,892 Subordinated renewable notes 14,949 – – 14,949 14,949 |
14. Quarterly Financial Data (T
14. Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of quarterly financial data table | Quarter Ended March 31, June 30, September 30, December 31, (In thousands, except per share data) 2017 Revenues $ 107,598 $ 110,072 $ 109,488 $ 107,225 Income before income tax expense 7,792 7,952 8,109 8,217 Net income (loss) 4,480 4,572 4,663 (9,951 ) Earnings (loss) per share: Basic $ 0.19 $ 0.20 $ 0.21 $ (0.46 ) Diluted 0.16 0.17 0.17 (0.46 ) 2016 Revenues $ 100,649 $ 104,933 $ 108,516 $ 108,183 Income before income tax expense 12,229 12,325 12,455 12,651 Net income 7,214 7,272 7,348 7,465 Earnings per share: Basic $ 0.29 $ 0.30 $ 0.31 $ 0.31 Diluted 0.24 0.25 0.26 0.26 2015 Revenues $ 85,989 $ 88,361 $ 93,991 $ 95,308 Income before income tax expense 14,749 15,200 15,649 15,783 Net income 8,333 8,537 8,843 8,967 Earnings per share: Basic $ 0.33 $ 0.33 $ 0.34 $ 0.35 Diluted 0.26 0.27 0.28 0.29 |
1. Summary of Significant Acc37
1. Summary of Significant Accounting Policies (Details - Other income) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Primary components of Other Income | |||
Other income for the period | $ 10,209 | $ 13,286 | $ 13,738 |
Direct Mail Revenues [Member] | |||
Primary components of Other Income | |||
Other income for the period | 6,432 | 9,202 | 8,927 |
Convenience Fee Revenue [Member] | |||
Primary components of Other Income | |||
Other income for the period | 1,900 | 2,145 | 2,610 |
Recoveries on Previously Charged-Off Contracts [Member] | |||
Primary components of Other Income | |||
Other income for the period | 563 | 766 | 1,079 |
Sales Tax Refunds [Member] | |||
Primary components of Other Income | |||
Other income for the period | 866 | 811 | 616 |
Other Income [Member] | |||
Primary components of Other Income | |||
Other income for the period | $ 448 | $ 362 | $ 506 |
1. Summary of Significant Acc38
1. Summary of Significant Accounting Policies (Details - Earnings Per Share) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||||||||||||||
Numerator for basic and diluted earnings per share | $ (9,951) | $ 4,663 | $ 4,572 | $ 4,480 | $ 7,465 | $ 7,348 | $ 7,272 | $ 7,214 | $ 8,967 | $ 8,843 | $ 8,537 | $ 8,333 | $ 3,765 | $ 29,300 | $ 34,681 |
Denominator for basic earnings per share - weighted average number of common shares outstanding during the year | 22,687 | 24,356 | 25,935 | ||||||||||||
Incremental common shares attibutable to exercise of outstanding options and warrants | 4,527 | 4,679 | 5,649 | ||||||||||||
Denominator for diluted earnings per share | 27,214 | 29,035 | 31,584 | ||||||||||||
Basic earnings per share | $ (0.46) | $ 0.21 | $ 0.20 | $ 0.19 | $ 0.31 | $ 0.31 | $ 0.30 | $ 0.29 | $ 0.35 | $ 0.34 | $ 0.33 | $ 0.33 | $ 0.17 | $ 1.20 | $ 1.34 |
Diluted earnings per share | $ (0.46) | $ 0.17 | $ 0.17 | $ 0.16 | $ 0.26 | $ 0.26 | $ 0.25 | $ 0.24 | $ 0.29 | $ 0.28 | $ 0.27 | $ 0.26 | $ 0.14 | $ 1.01 | $ 1.10 |
1. Summary of Significant Acc39
1. Summary of Significant Accounting Policies (Details Narrative) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Unrestricted cash balance | $ 12,731 | $ 13,936 | $ 19,322 | $ 17,859 |
Other assets | $ 23,397 | $ 30,252 | ||
Incremental shares excluded from EPS calculation | 7,500 | 7,900 | 6,800 | |
CPS Leasing, Inc. [Member] | ||||
Ownership percentage in subsidiary | 80.00% | |||
Repossessed Vehicles [Member] | ||||
Other assets | $ 9,700 | $ 11,100 | ||
Dealer concentration [Member] | Geographic Concentration [Member] | TEXAS | ||||
Concentration percentage | 7.40% | 7.30% | ||
Dealer concentration [Member] | Geographic Concentration [Member] | OHIO | ||||
Concentration percentage | 7.40% | 6.80% | ||
Dealer concentration [Member] | Geographic Concentration [Member] | CALIFORNIA | ||||
Concentration percentage | 7.10% | 7.20% | ||
Dealer concentration [Member] | Geographic Concentration [Member] | FLORIDA | ||||
Concentration percentage | 5.90% | 5.60% | ||
Dealer concentration [Member] | Geographic Concentration [Member] | NORTH CAROLINA | ||||
Concentration percentage | 5.80% | 5.30% |
2. Restricted Cash (Details Nar
2. Restricted Cash (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Securitizations and Credit Facility Reserves [Member] | ||
Restricted cash | $ 45,700 | $ 40,800 |
3. Finance Receivables (Details
3. Finance Receivables (Details - Components of Finance Receivables) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finance receivables | ||
Automobile finance receivables, net of unearned interest | $ 2,298,608 | $ 2,266,619 |
Unearned acquisition fees, discounts and deferred origination costs, net | 6,376 | 1,324 |
Finance receivables | $ 2,304,984 | $ 2,267,943 |
3. Finance Receivables (Detai42
3. Finance Receivables (Details - Delinquency status) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Delinquency Status | ||
Finance receivables, past due | $ 2,298,608 | $ 2,266,619 |
Current [Member] | ||
Delinquency Status | ||
Finance receivables, past due | 2,069,617 | 2,053,759 |
31 to 60 Days [Member] | ||
Delinquency Status | ||
Finance receivables, past due | 138,395 | 116,073 |
61 to 90 Days [Member] | ||
Delinquency Status | ||
Finance receivables, past due | 63,081 | 52,404 |
91 + Days [Member] | ||
Delinquency Status | ||
Finance receivables, past due | $ 27,515 | $ 44,383 |
3. Finance Receivables (Detai43
3. Finance Receivables (Details - Summary of activity) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finance Receivables | |||
Balance at beginning of year | $ 95,578 | $ 75,603 | $ 61,460 |
Provision for credit losses | 186,713 | 178,511 | 142,618 |
Charge-offs | (211,948) | (192,366) | (156,553) |
Recoveries | 38,844 | 33,830 | 28,078 |
Balance at end of year | $ 109,187 | $ 95,578 | $ 75,603 |
3. Finance Receivables (Detai44
3. Finance Receivables (Details - Repossessed inventory) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Finance Receivables | ||
Gross balance of repossessions in inventory | $ 33,679 | $ 40,069 |
Allowance for losses on repossessed inventory | (24,024) | (28,924) |
Net repossessed inventory included in other assets | $ 9,655 | $ 11,145 |
3. Finance Receivables (Detai45
3. Finance Receivables (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finance Receivables | ||
Finance receivables | $ 27,500 | $ 44,400 |
4. Furniture and Equipment (Det
4. Furniture and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Furniture and equipment, gross | $ 8,296 | $ 7,627 |
Less: accumulated depreciation and amortization | (6,544) | (5,610) |
Furniture and equipment, net | 1,752 | 2,017 |
Furniture and Fixtures [Member] | ||
Furniture and equipment, gross | 1,566 | 1,566 |
Computer and Telephone Equipment [Member] | ||
Furniture and equipment, gross | 5,470 | 4,907 |
Leasehold Improvements [Member] | ||
Furniture and equipment, gross | $ 1,260 | $ 1,154 |
4. Furniture and Equipment (D47
4. Furniture and Equipment (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 934 | $ 777 | $ 637 |
5. Securitization Trust Debt (D
5. Securitization Trust Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
"Securitization trust debt," and components of debt | |||
Receivables Pledged at end of period | [1] | $ 2,163,746 | |
Initial Principal | 4,842,590 | ||
Outstanding Principal | $ 2,095,675 | $ 2,094,253 | |
CPS 2012-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2,019 | |
Receivables Pledged at end of period | [1] | $ 0 | |
Initial Principal | 147,000 | ||
Outstanding Principal | $ 0 | 14,421 | |
Weighted Average Contractual Interest Rate | 0.00% | ||
CPS 2012-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2,020 | |
Receivables Pledged at end of period | [1] | $ 0 | |
Initial Principal | 160,000 | ||
Outstanding Principal | $ 0 | 17,865 | |
Weighted Average Contractual Interest Rate | 0.00% | ||
CPS 2013-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2,020 | |
Receivables Pledged at end of period | [1] | $ 0 | |
Initial Principal | 185,000 | ||
Outstanding Principal | $ 0 | 28,661 | |
Weighted Average Contractual Interest Rate | 0.00% | ||
CPS 2013-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2,020 | |
Receivables Pledged at end of period | [1] | $ 21,251 | |
Initial Principal | 205,000 | ||
Outstanding Principal | $ 18,407 | 37,570 | |
Weighted Average Contractual Interest Rate | 2.09% | ||
CPS 2013-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2,020 | |
Receivables Pledged at end of period | [1] | $ 26,518 | |
Initial Principal | 205,000 | ||
Outstanding Principal | $ 25,559 | 46,830 | |
Weighted Average Contractual Interest Rate | 5.88% | ||
CPS 2013-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2,021 | |
Receivables Pledged at end of period | [1] | $ 26,921 | |
Initial Principal | 183,000 | ||
Outstanding Principal | $ 24,917 | 46,345 | |
Weighted Average Contractual Interest Rate | 5.11% | ||
CPS 2014-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2,021 | |
Receivables Pledged at end of period | [1] | $ 33,120 | |
Initial Principal | 180,000 | ||
Outstanding Principal | $ 30,521 | 54,988 | |
Weighted Average Contractual Interest Rate | 4.33% | ||
CPS 2014-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2,021 | |
Receivables Pledged at end of period | [1] | $ 46,600 | |
Initial Principal | 202,500 | ||
Outstanding Principal | $ 44,516 | 75,140 | |
Weighted Average Contractual Interest Rate | 3.67% | ||
CPS 2014-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2,021 | |
Receivables Pledged at end of period | [1] | $ 73,634 | |
Initial Principal | 273,000 | ||
Outstanding Principal | $ 71,174 | 116,280 | |
Weighted Average Contractual Interest Rate | 3.87% | ||
CPS 2014-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2,022 | |
Receivables Pledged at end of period | [1] | $ 80,784 | |
Initial Principal | 267,500 | ||
Outstanding Principal | $ 79,099 | 127,307 | |
Weighted Average Contractual Interest Rate | 4.17% | ||
CPS 2015-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2,022 | |
Receivables Pledged at end of period | [1] | $ 89,171 | |
Initial Principal | 245,000 | ||
Outstanding Principal | $ 87,194 | 134,466 | |
Weighted Average Contractual Interest Rate | 3.73% | ||
CPS 2015-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2,022 | |
Receivables Pledged at end of period | [1] | $ 104,354 | |
Initial Principal | 250,000 | ||
Outstanding Principal | $ 102,873 | 153,893 | |
Weighted Average Contractual Interest Rate | 3.63% | ||
CPS 2015-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2,022 | |
Receivables Pledged at end of period | [1] | $ 142,703 | |
Initial Principal | 300,000 | ||
Outstanding Principal | $ 141,362 | 207,636 | |
Weighted Average Contractual Interest Rate | 4.15% | ||
CPS 2016-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2,023 | |
Receivables Pledged at end of period | [1] | $ 182,657 | |
Initial Principal | 329,460 | ||
Outstanding Principal | $ 180,761 | 262,260 | |
Weighted Average Contractual Interest Rate | 4.45% | ||
CPS 2016-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2,023 | |
Receivables Pledged at end of period | [1] | $ 206,881 | |
Initial Principal | 332,690 | ||
Outstanding Principal | $ 201,199 | 284,752 | |
Weighted Average Contractual Interest Rate | 4.50% | ||
CPS 2016-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2,023 | |
Receivables Pledged at end of period | [1] | $ 208,815 | |
Initial Principal | 318,500 | ||
Outstanding Principal | $ 203,504 | 285,618 | |
Weighted Average Contractual Interest Rate | 4.06% | ||
CPS 2016-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | April 2,024 | |
Receivables Pledged at end of period | [1] | $ 153,671 | |
Initial Principal | 206,325 | ||
Outstanding Principal | $ 149,671 | 200,221 | |
Weighted Average Contractual Interest Rate | 3.14% | ||
CPS 2017-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | April 2,024 | |
Receivables Pledged at end of period | [1] | $ 166,693 | |
Initial Principal | 206,320 | ||
Outstanding Principal | $ 161,892 | 0 | |
Weighted Average Contractual Interest Rate | 3.31% | ||
CPS 2017-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2,023 | |
Receivables Pledged at end of period | [1] | $ 198,860 | |
Initial Principal | 225,170 | ||
Outstanding Principal | $ 186,594 | 0 | |
Weighted Average Contractual Interest Rate | 2.90% | ||
CPS 2017-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2,024 | |
Receivables Pledged at end of period | [1] | $ 207,158 | |
Initial Principal | 224,825 | ||
Outstanding Principal | $ 197,155 | 0 | |
Weighted Average Contractual Interest Rate | 2.83% | ||
CPS 2017-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2,024 | |
Receivables Pledged at end of period | [1] | $ 193,957 | |
Initial Principal | 196,300 | ||
Outstanding Principal | $ 189,277 | $ 0 | |
Weighted Average Contractual Interest Rate | 2.74% | ||
[1] | Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets. | ||
[2] | 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 $873.7 million in 2018, $612.3 million in 2019, $362.5 million in 2020, $179.3 million in 2021, $49.5 million in 2022, and $5.9 million in 2023. |
5. Securitization Trust Debt 49
5. Securitization Trust Debt (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Expected finance receivable payments 2018 | $ 873,700 | |
Expected finance receivable payments 2019 | 612,300 | |
Expected finance receivable payments 2020 | 362,500 | |
Expected finance receivable payments 2021 | 179,300 | |
Expected finance receivable payments 2022 | 49,500 | |
Expected finance receivable payments 2023 | 5,900 | |
Restricted cash under various agreements | 112,000 | |
Securitization Trust Debt [Member] | ||
Debt issuance costs | $ 12,500 | $ 13,400 |
6. Debt (Details - Debt outstan
6. Debt (Details - Debt outstanding) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Warehouse lines of credit | $ 112,408 | $ 103,358 |
Subordinated renewable notes | 16,566 | 14,949 |
Total debt outstanding | $ 130,841 | 119,914 |
Subordinated Renewable Notes [Member] | ||
Interest rate | Weighted average rate of 7.99% and 7.50% at December 31, 2017 and 2016, respectively | |
Maturity date | Weighted average maturity of March 2020 and January 2019 at December 31, 2017 and 2016, respectively | |
Warehouse Lines Of Credit [Member] | ||
Warehouse lines of credit | $ 25,629 | 64,352 |
Interest rate | 5.50% over one month Libor (Minimum 6.50%) | |
Maturity date | April 2,019 | |
Warehouse Lines Of Credit (2) [Member] | ||
Warehouse lines of credit | $ 77,546 | 26,445 |
Interest rate | 5.50% over one month Libor (Minimum 6.25%) | |
Maturity date | August 2,018 | |
Warehouse Lines Of Credit (3) [Member] | ||
Warehouse lines of credit | $ 11,100 | 14,168 |
Interest rate | 6.75% over a commercial paper rate (Minimum 7.75%) | |
Maturity date | November 2,019 | |
Subordinated Renewable Notes [Member] | ||
Subordinated renewable notes | $ 16,566 | $ 14,949 |
6. Debt (Details - Debt maturit
6. Debt (Details - Debt maturity schedule) - Subordinated Renewable Notes [Member] $ in Thousands | Dec. 31, 2017USD ($) |
2,018 | $ 8,406 |
2,019 | 1,942 |
2,020 | 2,616 |
2,021 | 1,515 |
2,022 | 458 |
Thereafter | 1,629 |
Total | $ 16,566 |
6. Debt (Details Narrative)
6. Debt (Details Narrative) - USD ($) $ in Thousands | Nov. 24, 2015 | Apr. 17, 2015 | May 11, 2012 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt issuance costs | $ 1,900 | $ 1,600 | |||
Warehouse lines of credit | 112,408 | 103,358 | |||
Warehouse Credit Facility [Member] | Citibank [Member] | |||||
Credit line maximum | $ 100,000 | ||||
Warehouse lines of credit | 77,500 | ||||
Credit line maturity date | Aug. 31, 2018 | ||||
Warehouse Credit Facility [Member] | Fortress Investment Group [Member] | |||||
Credit line maximum | $ 100,000 | ||||
Warehouse lines of credit | 25,600 | ||||
Credit line maturity date | Apr. 30, 2019 | ||||
Warehouse Credit Facility [Member] | Credit Suisse AG and Ares Agent Services [Member] | |||||
Credit line maximum | $ 100,000 | ||||
Warehouse lines of credit | 11,100 | ||||
Credit line maturity date | Nov. 30, 2019 | ||||
Three Warehouse Lines Of Credit [Member] | |||||
Warehouse lines of credit | $ 114,300 | $ 105,000 |
7. Shareholders' Equity (Detail
7. Shareholders' Equity (Details - Assumptions) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Equity [Abstract] | |||
Expected life (years) | 4 years 7 days | 4 years 14 days | 4 years 2 months 16 days |
Risk-free interest rate | 1.59% | 1.09% | 1.35% |
Volatility | 36.00% | 51.00% | 51.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
7. Shareholders' Equity (Deta54
7. Shareholders' Equity (Details - Option activity) shares in Thousands | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Shares | |
Options outstanding at the beginning of period | shares | 12,595 |
Granted | shares | 1,470 |
Exercised | shares | (647) |
Forfeited/Expired | shares | (283) |
Options outstanding at the end of period | shares | 13,135 |
Options exercisable at the end of period | shares | 8,789 |
Weighted Average Exercise Price | |
Options outstanding at the beginning of period | $ / shares | $ 4.56 |
Granted | $ / shares | 4.35 |
Exercised | $ / shares | 1.68 |
Forfeited/Expired | $ / shares | 5.62 |
Options outstanding at the end of period | $ / shares | 4.66 |
Options exercisable at the end of period | $ / shares | $ 4.51 |
Weighted Average Remaining Contractual Term | |
Weighted average remaining contractual term, end of period | 4 years 5 months 12 days |
Weighted average remaining contractual term, exercisable at the end of period | 4 years 14 days |
7. Shareholders' Equity (Deta55
7. Shareholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Repurchase of common stock, value | $ (12,346) | $ (10,468) | $ (5,926) |
Proceeds from exercises | $ 1,085 | $ 706 | $ 1,726 |
Weighted average exercise price of stock options granted | $ 1.32 | $ 1.38 | $ 2.41 |
Voliatility assumptions, minimum | 35.00% | 44.00% | 47.00% |
Voliatility assumptions, maximum | 37.00% | 51.00% | 51.00% |
Stock-based compensation | $ 5,715 | $ 5,553 | $ 5,024 |
Unrecognized stock-based compensation costs | $ 5,800 | ||
Weighted-average period for unrecognized costs | 1 year 10 months 24 days | ||
Intrinsic value options outstanding | $ 10,400 | 17,800 | |
Intrinsic value of options exercisable | 9,500 | 14,200 | |
Intrinsic value of options exercised | 1,900 | $ 1,300 | |
Proceeds from options exercised | 1,100 | ||
Tax benefit from options exercised | $ 178 | ||
Warrants outstanding | 2,000,000 | ||
Common Stock [Member] | |||
Repurchase of common stock, shares | 2,745,493 | ||
Average price per share of common stock repurchased (in dollars per share) | $ 4.49 | ||
Common Stock [Member] | Open Market [Member] | |||
Repurchase of common stock, shares | 2,693,562 | ||
Repurchase of common stock, value | $ 12,100 | ||
Common Stock [Member] | Net Exercises of Outstanding Options and Warrants [Member] | |||
Repurchase of common stock, shares | 51,931 | ||
Proceeds from exercises | $ 241 | ||
Authorizations prior to December 31, 2016 [Member] | Common Stock [Member] | |||
Amount remaining of stock repurchase authorized amount | 4,700 | ||
No expiration [Member] | Common Stock [Member] | |||
Amount remaining of stock repurchase authorized amount | $ 12,600 | ||
2006 Plan [Member] | |||
Shares available for grant | 2,500,000 |
8. Interest Income and Intere56
8. Interest Income and Interest Expense (Details - Interest income) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components of interest income | |||
Interest on finance receivables | $ 423,567 | $ 408,723 | $ 349,796 |
Other interest income | 607 | 273 | 116 |
Interest income | $ 424,174 | $ 408,996 | $ 349,912 |
8. Interest Income and Intere57
8. Interest Income and Interest Expense (Details - Interest expense) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Total interest expense | $ 92,345 | $ 79,941 | $ 57,745 |
Securitization Trust Debt [Member] | |||
Total interest expense | 83,084 | 69,178 | 48,631 |
Warehouse Lines Of Credit [Member] | |||
Total interest expense | 7,933 | 8,569 | 6,127 |
Residual interest financing [Member] | |||
Total interest expense | 0 | 846 | 1,405 |
Subordinated Renewable Notes [Member] | |||
Total interest expense | $ 1,328 | $ 1,348 | $ 1,582 |
9. Income Taxes (Details - Inco
9. Income Taxes (Details - Income tax expense) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Current federal tax expense | $ 14,369 | $ 22,872 | $ 18,653 |
Current state tax expense | 3,305 | 2,671 | 1,146 |
Deferred federal tax expense | 10,131 | (6,329) | 4,233 |
Deferred state tax expense (benefit) | 501 | 1,147 | 2,669 |
Income tax expense | $ 28,306 | $ 20,361 | $ 26,701 |
9. Income Taxes (Details - Tax
9. Income Taxes (Details - Tax rate effect) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Expense at federal tax rate | $ 11,225 | $ 17,381 | $ 21,484 |
State taxes, net of federal income tax effect | 1,831 | 2,679 | 3,235 |
Stock-based compensation | 682 | 824 | 1,560 |
Non-deductible expenses | 171 | 145 | 107 |
Effect of change in tax rate | 15,117 | 0 | 0 |
Other | (720) | (668) | 315 |
Income tax expense | $ 28,306 | $ 20,361 | $ 26,701 |
9. Income Taxes (Details - Defe
9. Income Taxes (Details - Deferred taxes) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred Tax Assets: | ||
Finance receivables | $ 23,034 | $ 28,986 |
Accrued liabilities | 206 | 2,322 |
NOL carryforwards | 529 | 1,697 |
Built in losses | 5,277 | 8,915 |
Pension accrual | 1,654 | 2,107 |
Stock compensation | 3,642 | 0 |
Other | 582 | 2,343 |
Total deferred tax assets | 34,924 | 46,370 |
Deferred Tax Liabilities: | ||
Deferred loan costs | (2,233) | (3,223) |
Furniture and Equipment | (245) | (302) |
Total deferred tax liabilities | (2,478) | (3,525) |
Net deferred tax asset | $ 32,446 | $ 42,845 |
9. Income Taxes (Details Narrat
9. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net deferred tax asset | $ 32,400 | ||
Unrecognized tax benefits | $ 0 | ||
Statutory federal rate | 35.00% | ||
Income tax expense | $ 28,306 | $ 20,361 | $ 26,701 |
Effect of change in tax rate | 15,117 | $ 0 | $ 0 |
Excluding the impact of the Tax Act, income tax expense | 13,200 | ||
Operating Income (Loss) [Member] | |||
Net deferred tax asset | 5,800 | ||
State [Member] | |||
Net deferred tax asset | 9,600 | ||
Net operating loss carryforwards | $ 12,300 | ||
Net operating losses expire | Dec. 31, 2018 | ||
Federal [Member] | |||
Net deferred tax asset | $ 22,800 |
10. Related Party Transactions
10. Related Party Transactions (Details Narrative) $ in Thousands | Dec. 31, 2017USD ($) |
Related Party Transactions [Abstract] | |
Related party amounts outstanding | $ 4,000 |
11. Commitments and Contingen63
11. Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 6,493 |
2,019 | 6,790 |
2,020 | 6,710 |
2,021 | 6,858 |
2,022 | 5,465 |
Thereafter | 1,616 |
Total minimum lease payments | $ 33,932 |
11. Commitments and Contingen64
11. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 6,300 | $ 5,200 | $ 4,100 |
Liability for losses due to legal proceedings, maximum | $ 1,000 |
12. Employee Benefits (Details
12. Employee Benefits (Details - Reconciliation) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Change in Projected Benefit Obligation | |||
Projected benefit obligation, beginning of year | $ 21,515 | $ 21,385 | $ 22,559 |
Service cost | 0 | 0 | |
Interest cost | 855 | 882 | 843 |
Assumption changes | 1,535 | 95 | |
Actuarial (gain) loss | (298) | 89 | |
Settlements | 0 | 0 | |
Benefits paid | (1,045) | (936) | |
Projected benefit obligation, end of year | 22,562 | 21,515 | 21,385 |
Change in Plan Assets | |||
Fair value of plan assets, beginning of year | 16,243 | 16,374 | |
Return on assets | 1,508 | 1,031 | |
Employer contribution | 0 | 0 | |
Expenses | (260) | (226) | |
Settlements | 0 | 0 | |
Benefits paid | (1,045) | (936) | |
Fair value of plan assets, end of year | 16,446 | 16,243 | $ 16,374 |
Funded Status at end of year | $ (6,116) | $ (5,272) |
12. Employee Benefits (Detail66
12. Employee Benefits (Details - Weighted average assumptions) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted average assumptions used to determine benefit obligations | ||
Discount rate | 3.50% | 4.05% |
Weighted average assumptions used to determine net periodic benefit cost | ||
Discount rate | 4.05% | 4.20% |
Expected return on plan assets | 7.25% | 7.50% |
12. Employee Benefits (Detail67
12. Employee Benefits (Details - Amounts recognized) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Amounts recognized on Consolidated Balance Sheet | |||
Other assets | $ 0 | $ 0 | $ 0 |
Other liabilities | (6,116) | (5,272) | (5,011) |
Net amount recognized | (6,116) | (5,272) | (5,011) |
Amounts recognized in accumulated other comprehensive loss consists of: | |||
Net loss | 11,350 | 10,618 | 10,592 |
Unrecognized transition asset | 0 | 0 | 0 |
Net amount recognized | 11,350 | 10,618 | 10,592 |
Components of net periodic benefit cost | |||
Interest Cost | 855 | 882 | 843 |
Expected return on assets | (1,149) | (1,199) | (1,508) |
Amortization of transition asset | 0 | 0 | 0 |
Amortization of net loss | 405 | 553 | 349 |
Net periodic benefit cost | 111 | 236 | (316) |
Settlement (gain)/loss | 0 | 0 | 0 |
Total | 111 | 236 | (316) |
Benefit Obligation Recognized in Other Comprehensive Loss (Income) | |||
Net loss (gain) | 732 | 25 | 2,615 |
Prior service cost (credit) | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 |
Net amount recognized in other comprehensive loss (income) | $ 732 | $ 25 | $ 2,615 |
12. Employee Benefits (Detail68
12. Employee Benefits (Details - Asset allocation) | Dec. 31, 2017 | Dec. 31, 2016 |
Weighted Average Asset Allocation at Year-End | 100.00% | 100.00% |
Equity Securities [Member] | ||
Weighted Average Asset Allocation at Year-End | 83.00% | 85.00% |
Debt Securities [Member] | ||
Weighted Average Asset Allocation at Year-End | 17.00% | 15.00% |
Cash And Cash Equivalents [Member] | ||
Weighted Average Asset Allocation at Year-End | 0.00% | 0.00% |
12. Employee Benefits (Detail69
12. Employee Benefits (Details - Estimated future benefit payments) $ in Thousands | Dec. 31, 2017USD ($) |
Estimated Future Benefit Payments (In thousands) | |
2,018 | $ 822 |
2,019 | 854 |
2,020 | 895 |
2,021 | 936 |
2,022 | 981 |
Years 2023-2027 | 5,449 |
Anticipated Contributions in 2018 | $ 0 |
12. Employee Benefits (Detail70
12. Employee Benefits (Details - Fair value of plan assets) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair value of plan assets | $ 16,446 | $ 16,243 | $ 16,374 | |
Level 1 [Member] | ||||
Fair value of plan assets | [1] | 3,633 | 4,581 | |
Level 2 [Member] | ||||
Fair value of plan assets | [2] | 12,813 | 11,662 | |
Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Company Common Stock [Member] | ||||
Fair value of plan assets | 3,633 | 4,581 | ||
Company Common Stock [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 3,633 | 4,581 | |
Company Common Stock [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 0 | ||
Company Common Stock [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Large Cap Value [Member] | ||||
Fair value of plan assets | 2,324 | 2,238 | ||
Large Cap Value [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Large Cap Value [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 2,324 | 2,238 | |
Large Cap Value [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Mid Cap Index [Member] | ||||
Fair value of plan assets | 654 | 625 | ||
Mid Cap Index [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Mid Cap Index [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 654 | 625 | |
Mid Cap Index [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Small Cap Growth [Member] | ||||
Fair value of plan assets | 657 | 621 | ||
Small Cap Growth [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Small Cap Growth [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 657 | 621 | |
Small Cap Growth [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Small Cap Value [Member] | ||||
Fair value of plan assets | 647 | 687 | ||
Small Cap Value [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Small Cap Value [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 647 | 687 | |
Small Cap Value [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Large Cap Blend [Member] | ||||
Fair value of plan assets | 661 | |||
Large Cap Blend [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Large Cap Blend [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 661 | ||
Large Cap Blend [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Growth [Member] | ||||
Fair value of plan assets | 2,313 | 1,980 | ||
Growth [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Growth [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 2,313 | 1,980 | |
Growth [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
International Growth [Member] | ||||
Fair value of plan assets | 2,683 | 2,392 | ||
International Growth [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
International Growth [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 2,683 | 2,392 | |
International Growth [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Core Bond [Member] | ||||
Fair value of plan assets | 1,870 | 1,644 | ||
Core Bond [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Core Bond [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 1,870 | 1,644 | |
Core Bond [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
High Yield [Member] | ||||
Fair value of plan assets | 373 | 356 | ||
High Yield [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
High Yield [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 354 | 356 | |
High Yield [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Inflation Protected Bond [Member] | ||||
Fair value of plan assets | 505 | 433 | ||
Inflation Protected Bond [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Inflation Protected Bond [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 505 | 433 | |
Inflation Protected Bond [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | ||
Money Market [Member] | ||||
Fair value of plan assets | 126 | 10 | ||
Money Market [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | ||
Money Market [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 126 | 10 | |
Money Market [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | $ 0 | ||
Focus Value [Member] | ||||
Fair value of plan assets | 676 | |||
Focus Value [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | |||
Focus Value [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 676 | ||
Focus Value [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | |||
[1] | Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. | |||
[2] | All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. | |||
[3] | There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs. |
12. Employee Benefits (Detail71
12. Employee Benefits (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Benefits Details Narrative | |||
401(k) plan contributions | $ 1,200 | $ 929 | $ 838 |
Expected long term rate of return | 7.25% | 7.50% | |
Estimated net loss amortized into net periodic benefit cost | $ 443 |
13. Fair Value Measurements (De
13. Fair Value Measurements (Details - Fair values) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Assets: | ||||
Cash and cash equivalents | $ 12,731 | $ 13,936 | $ 19,322 | $ 17,859 |
Restricted cash and equivalents | 111,965 | 112,754 | ||
Finance receivables, net | 2,171,846 | 2,104,503 | ||
Accrued interest receivable | 46,753 | 36,233 | ||
Liabilities: | ||||
Warehouse lines of credit | 112,408 | 103,358 | ||
Accrued interest payable | 4,212 | 3,715 | ||
Securitization trust debt | 2,089,678 | 2,138,892 | ||
Subordinated renewable notes | 16,566 | 14,949 | ||
Level 1 [Member] | ||||
Assets: | ||||
Cash and cash equivalents | 12,731 | 13,936 | ||
Restricted cash and equivalents | 111,965 | 112,754 | ||
Finance receivables, net | 0 | 0 | ||
Accrued interest receivable | 0 | 0 | ||
Liabilities: | ||||
Warehouse lines of credit | 0 | 0 | ||
Accrued interest payable | 0 | 0 | ||
Securitization trust debt | 0 | 0 | ||
Subordinated renewable notes | 0 | 0 | ||
Level 2 [Member] | ||||
Assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash and equivalents | 0 | 0 | ||
Finance receivables, net | 0 | 0 | ||
Accrued interest receivable | 0 | 0 | ||
Liabilities: | ||||
Warehouse lines of credit | 0 | 0 | ||
Accrued interest payable | 0 | 0 | ||
Securitization trust debt | 0 | 0 | ||
Subordinated renewable notes | 0 | 0 | ||
Level 3 [Member] | ||||
Assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash and equivalents | 0 | 0 | ||
Finance receivables, net | 2,171,846 | 2,104,503 | ||
Accrued interest receivable | 46,753 | 36,233 | ||
Liabilities: | ||||
Warehouse lines of credit | 112,408 | 103,358 | ||
Accrued interest payable | 4,212 | 3,715 | ||
Securitization trust debt | 2,089,678 | 2,138,892 | ||
Subordinated renewable notes | 16,566 | 14,949 | ||
Carrying Value [Member] | ||||
Assets: | ||||
Cash and cash equivalents | 12,731 | |||
Restricted cash and equivalents | 111,965 | |||
Finance receivables, net | 2,195,797 | |||
Accrued interest receivable | 46,753 | |||
Liabilities: | ||||
Warehouse lines of credit | 112,408 | |||
Accrued interest payable | 4,212 | |||
Securitization trust debt | 2,083,215 | |||
Subordinated renewable notes | $ 16,566 | |||
Total Amount [Member] | ||||
Assets: | ||||
Cash and cash equivalents | 13,936 | |||
Restricted cash and equivalents | 112,754 | |||
Finance receivables, net | 2,172,365 | |||
Accrued interest receivable | 36,233 | |||
Liabilities: | ||||
Warehouse lines of credit | 103,358 | |||
Accrued interest payable | 3,715 | |||
Securitization trust debt | 2,080,900 | |||
Subordinated renewable notes | $ 14,949 |
13. Fair Value Measurements (73
13. Fair Value Measurements (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Measurements Details Narrative | ||
Finance receivables related to reposessed vehicles in inventory | $ 33,679 | $ 40,069 |
Valuation adjustment, loss allowance | $ 24,024 | 28,924 |
Recovery rate | 29.00% | |
Estimated fair value and carrying amount of repossed inventory | $ 9,655 | $ 11,145 |
14.Quarterly Financial Data (De
14.Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||
Revenues | $ 107,225 | $ 109,488 | $ 110,072 | $ 107,598 | $ 108,183 | $ 108,516 | $ 104,933 | $ 100,649 | $ 95,308 | $ 93,991 | $ 88,361 | $ 85,989 | $ 434,383 | $ 422,282 | $ 363,650 |
Income before income tax expense | 8,217 | 8,109 | 7,952 | 7,792 | 12,651 | 12,455 | 12,325 | 12,229 | 15,783 | 15,649 | 15,200 | 14,749 | 32,071 | 49,661 | 61,382 |
Net income (loss) | $ (9,951) | $ 4,663 | $ 4,572 | $ 4,480 | $ 7,465 | $ 7,348 | $ 7,272 | $ 7,214 | $ 8,967 | $ 8,843 | $ 8,537 | $ 8,333 | $ 3,765 | $ 29,300 | $ 34,681 |
Earnings per share - basic | $ (0.46) | $ 0.21 | $ 0.20 | $ 0.19 | $ 0.31 | $ 0.31 | $ 0.30 | $ 0.29 | $ 0.35 | $ 0.34 | $ 0.33 | $ 0.33 | $ 0.17 | $ 1.20 | $ 1.34 |
Earnings per share - diluted | $ (0.46) | $ 0.17 | $ 0.17 | $ 0.16 | $ 0.26 | $ 0.26 | $ 0.25 | $ 0.24 | $ 0.29 | $ 0.28 | $ 0.27 | $ 0.26 | $ 0.14 | $ 1.01 | $ 1.10 |
15. Subsequent Events (Details
15. Subsequent Events (Details Narrative) - Asset-backed Securities [Member] - Subsequent Event [Member] - USD ($) $ in Thousands | 1 Months Ended | |
Feb. 09, 2018 | Jan. 16, 2018 | |
Asset-backed notes sold | $ 190,000 | |
Asset-backed notes secured by automobile receivables | $ 193,600 | |
Weighted average yield on notes | 3.46% | |
Receivables sold | $ 72,300 | $ 121,300 |