Consumer Portfolio Services Inc. Reports 1998 Q2 Results
16 July 1998
Consumer Portfolio Services Inc. Reports 1998 Second Quarter Results; Quarterly Earnings Up 35%
IRVINE, Calif.--July 16, 1998--Consumer Portfolio Services Inc. Thursday announced financial results for its second quarter, ended June 30, 1998.For the second quarter, total revenues increased 105% to $37.2 million, compared with $18.1 million for the same period in the prior year. The company's net earnings increased 35.1% to $5.9 million, or $0.36 per share, on 16.8 million diluted shares outstanding, compared with $4.4 million, or $0.28 per share, on 15.8 million diluted shares outstanding for the same period in the prior year.
For the six months ended June 30, 1998, total revenues increased 87.7% to $64.5 million, compared with $34.4 million for the same period in the prior year. Net earnings increased 35.1% to $11.5 million, or $0.70 per share on 16.7 million diluted shares, compared with $8.5 million, or $0.55 per share on 15.6 million diluted shares for the same period in the prior year.
Purchases of contracts from automobile dealers increased 126.6% in the second quarter to $338.4 million, compared with $149.4 million for the same period in 1997. Contracts sold during the second quarter in the form of asset-backed securities increased 76.8% to $211.0 million, compared with $119.4 million for the same period in the prior year. The aggregate outstanding balance of contracts serviced by the company at June 30, 1998, increased by 93.7% to $1.3 billion, compared with $674.1 million at June 30, 1997.
Balances of accounts past due over 30 days represented 3.9% of the servicing portfolio at June 30, 1998, compared with 5.7% at June 30, 1997. The annualized net charge off rate for the three month period ended June 30, 1998, was 6.4%, compared with 5.8% for the three month period ended June 30, 1997. The company's non-discounted allowance for credit losses equaled $112.1 million, or 10.9% of the contracts sold that it serviced as of June 30, 1998. The on-balance sheet allowance for credit losses was $11.5 million, or 4.6% of contracts held for sale at June 30, 1998.
"We are very pleased with the company's performance for our fiscal second quarter of 1998," said Charles E. Bradley, Jr., president and chief executive officer. "The credit quality of our servicing portfolio continues to improve. Annualized net charge offs were 6.4%, equal to first quarter 1998, and in line with our expectations. Delinquent accounts represented only 3.9% of the servicing portfolio, the lowest delinquency ratio that we have achieved since June 1995. As of June 30, 1998, our inventory of repossessed vehicles declined to 2.2% of the servicing portfolio, compared with 2.4% for both March 1998 and December 1997. Non-performing contracts totaled 6.2% of the $1.3 billion servicing portfolio, our best performance since June 1995, when the servicing portfolio totaled only $217 million.
"We continue to be pleased with our origination volume, purchasing 33% more contracts in the second quarter of 1998 than in the first quarter of 1998 and 127% more than in the second quarter of 1997. The factors most influencing our ability to achieve rapid growth while improving the credit quality of the servicing portfolio are the rationalization of pricing in the marketplace and the dedication of our staff to consistent and thorough underwriting, servicing, and collections."
The company also announced that discussions with Standard Pacific Corp. regarding the proposed purchase of Standard Pacific Savings, F.A. ("SP Savings") have terminated. SP Savings is a federally chartered savings institution located in Newport Beach, Calif. and a wholly owned subsidiary of Standard Pacific Corp. The company and Standard Pacific Corp. were unable to reach agreement on the terms of a definitive agreement. The company has withdrawn its application to the Office of Thrift Supervision for approval of the transaction.
Statements made in this news release regarding ongoing growth are forward-looking statements, as are the company's allowances for credit losses. In addition to risks relating to the economy generally, the company's ability to grow and the accuracy of its estimates may be adversely affected by various factors, including the following: possible increased delinquencies, foreclosures and losses on retail installment contracts; possible unavailability of qualified personnel; adverse economic conditions in geographic areas in which the company's business is concentrated; changes in interest rates, adverse changes in the market for securitized receivables pools, or the reduction or unavailability of warehouse lines of credit, each of which could restrict the company's ability to obtain cash for new contract purchases; increases in the amounts required to be set aside as credit enhancement to support future securitizations; increased competition from other automobile finance sources; reduction in the number and amount of acceptable contracts submitted to the company by its automobile dealer network; and changes in government regulations affecting consumer credit.
Consumer Portfolio Services purchases, sells and services retail installment sales contracts originated predominantly by franchised dealers for new and late model used cars. The company has approximately 4,000 dealers under contract across the United States.
Consumer Portfolio Services Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Gain on sale of
contracts $ 16,560 $ 7,942 $ 29,341 $ 15,275
Interest income 14,524 5,967 23,596 11,673
Servicing fees 5,896 3,301 10,992 6,130
Other 211 901 581 1,290
37,191 18,111 64,510 34,368
Expenses:
Interest 4,614 2,221 8,529 3,659
Employee costs 6,954 3,311 12,350 6,533
General and administrative 5,044 3,719 9,576 6,219
Provision for credit losses 7,467 569 10,004 1,596
Other expenses 2,872 742 4,153 1,669
26,951 10,562 44,612 19,676
Earnings before income
taxes 10,240 7,549 19,898 14,692
Income taxes 4,315 3,163 8,370 6,162
Net earnings $ 5,925 $ 4,386 $ 11,528 $ 8,530
Earnings per share:
Basic $ 0.39 $ 0.31 $ 0.76 $ 0.60
Diluted $ 0.36 $ 0.28 $ 0.70 $ 0.55
Number of shares used in
computing earnings per
share:
Basic 15,215 14,297 15,215 14,234
Diluted 16,762 15,772 16,683 15,614
-0-
Condensed Consolidated Balance Sheets
(In thousands)
June 30, Dec. 31,
1998 1997
Cash $ 982 $ 1,745
Contracts held for sale 237,982 68,271
Residual interest in securitizations 164,054 124,616
Other assets 36,783 31,263
Total assets $ 439,801 $ 225,895
Warehouse lines of credit $ 249,224 $ 61,666
Subordinated debt 55,000 55,055
Other liabilities 40,899 26,567
Total liabilities 345,123 143,288
Shareholders' equity 94,678 82,607
Total liabilities and shareholders'
equity $ 439,801 $ 225,895