Consumer Portfolio Services Inc. (CPSS, Financial) filed Quarterly Report for the period ended 2010-03-31.
Consumer Portfolio Services Inc. has a market cap of $30.9 million; its shares were traded at around $1.698 with and P/S ratio of 0.2.
Revenues. During the three months ended March 31, 2010, revenues were $44.6 million, a decrease of $21.5 million, or 32.5%, from the prior year revenue of $66.0 million. The primary reason for the decrease in revenues is a decrease in interest income. Interest income for the three months ended March 31, 2010 decreased $22.2 million, or 36.3%, to $39.0 million from $61.2 million in the prior year. The primary reason for the decrease in interest income is the decrease in finance receivables held by consolidated subsidiaries.
Servicing fees totaling $2.4 million in the three months ended March 31, 2010 increased $1.4 million, or 132.1%, from $1.0 million in the prior year. The increase in servicing fees is the result of our appointment in November 2009 as a third-party servicer for a $147 million portfolio of sub-prime automobile receivables owned by a bankruptcy remote subsidiary of CompuCredit Corporation. During 2008 we also earned base servicing fees on our September 2008 term securitization transaction (which is treated as a sale for financial accounting purposes) and a portfolio which we have serviced for SeaWest Financial Corporation since April
At March 31, 2010, we were generating income and fees on a managed portfolio with an outstanding principal balance of $1,044.1 million (this amount includes $120.7 million of automobile contracts on which we earn servicing fees, own 5.0% of the asset-backed notes issued by the related trust, and own a residual interest and another $118.2 million of automobile contracts on which we earn servicing fees and own a note collateralized by such contracts), compared to a managed portfolio with an outstanding principal balance of $1,488.4 million as of March 31, 2009. At March 31, 2010 and 2009, the managed portfolio composition was as follows:
Interest expense for the three months ended March 31, 2010 decreased $9.8 million, or 30.4%, to $22.3 million, compared to $32.1 million in the previous year. The decrease is primarily the result of changes in the amount and composition of securitization trust debt carried on our consolidated balance sheet. Interest on securitization trust debt decreased by $9.8 million in the three months ended March 31, 2010 compared to the prior year. Interest expense on senior secured and subordinated debt increased by $50,000, and interest expense on residual interest financing decreased $452,000 in the three months ended March 31, 2010 compared to the prior year. Interest expense on warehouse debt increased by $399,000 for the three months ended March 31, 2010 compared to the prior year. In the prior period, we had no access to additional funding but were paying interest on an amortizing facility. In the current period we have increased our borrowings on the $50 million credit facility we established in September 2009 and the $50 million term funding facility established in March 2010. As of March 31, 2010, our $50 million credit facility had an outstanding balance of $17.6 million and our recently established term funding facility had an outstanding balance of $9.2 million.
For the three months ended March 31, 2010, we recorded no net tax provision or benefit. As of March 31, 2010, our net deferred tax asset of $33.5 million is net of a valuation allowance of $28.6 million and consists of approximately $30.2 million of net U.S. federal deferred tax assets and $3.3 million of net state deferred tax assets. The major components of the deferred tax asset are $19.6 million in net operating loss carryforwards and built in losses and $13.9 million in net deductions which have not yet been taken on a tax return. We have considered the circumstances that may affect the ultimate realization of our deferred tax assets and have concluded that the valuation allowance is appropriate at this time. However, if future events change our expected realization of our deferred tax assets, we may be required to increase the valuation allowance against that asset in the future.
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Consumer Portfolio Services Inc. has a market cap of $30.9 million; its shares were traded at around $1.698 with and P/S ratio of 0.2.
Highlight of Business Operations:
We were incorporated and began our operations in March 1991. From inception through March 31, 2010, we have purchased a total of approximately $8.7 billion of automobile contracts from dealers. In addition, we obtained a total of approximately $605.0 million of automobile contracts in mergers and acquisitions we made in 2002, 2003 and 2004. Since January 2008, our managed portfolio has been decreasing due to our strategy of reducing contract purchases to conserve our liquidity in response to adverse economic conditions as discussed further below. Our total managed portfolio, net of unearned interest on pre-computed automobile contracts, was approximately $1,044.1 million at March 31, 2010 compared to $1,488.4 million at March 31, 2009.Revenues. During the three months ended March 31, 2010, revenues were $44.6 million, a decrease of $21.5 million, or 32.5%, from the prior year revenue of $66.0 million. The primary reason for the decrease in revenues is a decrease in interest income. Interest income for the three months ended March 31, 2010 decreased $22.2 million, or 36.3%, to $39.0 million from $61.2 million in the prior year. The primary reason for the decrease in interest income is the decrease in finance receivables held by consolidated subsidiaries.
Servicing fees totaling $2.4 million in the three months ended March 31, 2010 increased $1.4 million, or 132.1%, from $1.0 million in the prior year. The increase in servicing fees is the result of our appointment in November 2009 as a third-party servicer for a $147 million portfolio of sub-prime automobile receivables owned by a bankruptcy remote subsidiary of CompuCredit Corporation. During 2008 we also earned base servicing fees on our September 2008 term securitization transaction (which is treated as a sale for financial accounting purposes) and a portfolio which we have serviced for SeaWest Financial Corporation since April
At March 31, 2010, we were generating income and fees on a managed portfolio with an outstanding principal balance of $1,044.1 million (this amount includes $120.7 million of automobile contracts on which we earn servicing fees, own 5.0% of the asset-backed notes issued by the related trust, and own a residual interest and another $118.2 million of automobile contracts on which we earn servicing fees and own a note collateralized by such contracts), compared to a managed portfolio with an outstanding principal balance of $1,488.4 million as of March 31, 2009. At March 31, 2010 and 2009, the managed portfolio composition was as follows:
Interest expense for the three months ended March 31, 2010 decreased $9.8 million, or 30.4%, to $22.3 million, compared to $32.1 million in the previous year. The decrease is primarily the result of changes in the amount and composition of securitization trust debt carried on our consolidated balance sheet. Interest on securitization trust debt decreased by $9.8 million in the three months ended March 31, 2010 compared to the prior year. Interest expense on senior secured and subordinated debt increased by $50,000, and interest expense on residual interest financing decreased $452,000 in the three months ended March 31, 2010 compared to the prior year. Interest expense on warehouse debt increased by $399,000 for the three months ended March 31, 2010 compared to the prior year. In the prior period, we had no access to additional funding but were paying interest on an amortizing facility. In the current period we have increased our borrowings on the $50 million credit facility we established in September 2009 and the $50 million term funding facility established in March 2010. As of March 31, 2010, our $50 million credit facility had an outstanding balance of $17.6 million and our recently established term funding facility had an outstanding balance of $9.2 million.
For the three months ended March 31, 2010, we recorded no net tax provision or benefit. As of March 31, 2010, our net deferred tax asset of $33.5 million is net of a valuation allowance of $28.6 million and consists of approximately $30.2 million of net U.S. federal deferred tax assets and $3.3 million of net state deferred tax assets. The major components of the deferred tax asset are $19.6 million in net operating loss carryforwards and built in losses and $13.9 million in net deductions which have not yet been taken on a tax return. We have considered the circumstances that may affect the ultimate realization of our deferred tax assets and have concluded that the valuation allowance is appropriate at this time. However, if future events change our expected realization of our deferred tax assets, we may be required to increase the valuation allowance against that asset in the future.
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