Consumer Portfolio Services, Inc. (CPSS)

[OptionMonster]

Consumer Portfolio Services, Inc. Reports 2007 Fourth Quarter and Full-Year Earnings
IRVINE, Calif.--(BUSINESS WIRE)--Feb. 12, 2008--Consumer Portfolio Services, Inc. (Nasdaq: CPSS) ("CPS" or the "Company") today announced earnings for its fourth quarter and year ended December 31, 2007.

Pretax income for the fourth quarter of 2007 increased to $6.0 million, compared to pretax income of $4.5 million for the fourth quarter of 2006. Net income for the fourth quarter of 2007 was $3.5 million, or $0.17 per diluted share, compared to net income of $30.9 million, or $1.30 per diluted share, for the year-ago quarter. Net income for the 2006 period included a net tax benefit of $26.4 million, or $1.11 per diluted share, related to the reversal of most of the valuation allowance against the deferred tax asset on the Company's books. Without the tax gain, and assuming the tax rate that was in effect in 2006, net income for the fourth quarter of 2006 would have been $2.7 million, or $0.11 per diluted share.

Total revenues for the fourth quarter of 2007 increased approximately $29.6 million, or 37.1%, to $109.5 million, compared to $79.9 million for the fourth quarter of 2006. Total operating expenses for the fourth quarter of 2007 were $103.5 million, an increase of $28.2 million, or 37.4%, as compared to $75.4 million for the 2006 period.

Pretax income for the full year 2007 increased to $24.0 million, compared to pretax income of $13.2 million for 2006. Net income for the year ended December 31, 2007 was $13.9 million, or $0.61 per diluted share, compared to net income of $39.6 million, or $1.64 per diluted share, for the year ended December 31, 2006. As discussed above, net income for 2006 included a net tax benefit of $26.4 million, or $1.09 per diluted share. Without the tax gain, and assuming the tax rate that was in effect in 2006, net income for 2006 would have been $7.8 million, or $0.32 per diluted share.

For the year ended December 31, 2007 total revenues increased approximately $115.7 million, or 41.5%, to $394.6 million, compared to $278.9 million for the year ended December 31, 2006. Total operating expenses for the year ended December 31, 2007 were $370.6 million, an increase of $104.9 million, or 39.5%, as compared to $265.7 million for the year ended December 31, 2006.

During the fourth quarter of 2007, CPS purchased $265.8 million of contracts from dealers as compared to $340.2 million during the third quarter of 2007 and $241.4 million during the fourth quarter of 2006. For 2007, CPS purchased $1,282.3 million of contracts from dealers as compared to $1,019.0 million in 2006, an increase of 25.8%. The Company's managed receivables totaled $2,126.2 million as of December 31, 2007, an increase of $560.3 million, or 35.8%, from $1,565.9 million as of December 31, 2006, as follows ($ in millions):

December 31, 2007 December 31, 2006
----------------- -----------------
Owned by Consolidated Subsidiaries
(a) $2,125.7 $1,527.3
Owned by Non-Consolidated
Subsidiaries 0.0 34.8
As Third Party Servicer for
SeaWest Financial 0.4 3.8
----------------- -----------------
Total $2,126.2 $1,565.9

(a) Before $154.4 million and $125.9 million of allowance for credit
losses, deferred acquisition fees and repossessed vehicles for 2007
and 2006, respectively.

Annualized net charge-offs during the December 2007 quarter were 6.3% of the average owned portfolio as compared to 5.9% during the 2006 quarter. Annualized net charge-offs for the full year 2007 were 5.3% of the average owned portfolio as compared to 4.5% for the full year 2006. Delinquencies greater than 30 days (including repossession inventory) were 6.3% of the total owned portfolio as of December 31, 2007, as compared to 5.5% as of December 31, 2006.

"2007 was a landmark year for CPS as our new contract purchases and total managed portfolio both reached their highest levels in our history," said Charles E. Bradley, Jr., President and Chief Executive Officer. "Our execution of the managed growth strategy we set in motion four years ago has gone very well as our year-over-year pretax income growth continues. While asset performance metrics deteriorated a modest amount in 2007 vs. 2006, we expected a bit of normalization as 2006 was one of the best years for consumer credit in the last 10 years. Despite these increases, net charge-offs and delinquencies for the quarter and year remain within the range of our seasonal expectations."

Conference Call

CPS announced that it will hold a conference call tomorrow, February 13, 2007, at 1:30 p.m. ET to discuss its quarterly earnings. Those wishing to participate by telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the scheduled time.

A replay will be available between February 13, 2007 and February 20, 2007, beginning one hour after conclusion of the call, by dialing 800-642-1687 or 706-645-9291 for international participants, with pin number 34672747. A broadcast of the conference call will also be available live and for 30 days after the call via the Company's web site at www.consumerportfolio.com and at www.streetevents.com.

About Consumer Portfolio Services, Inc.

Consumer Portfolio Services, Inc. is a specialty finance company engaged in purchasing and servicing new and used retail automobile contracts originated primarily by franchised automobile dealerships and to a lesser extent by select independent dealers of used automobiles in the United States. We serve as an alternative source of financing for dealers, facilitating sales to sub-prime customers, who have limited credit history, low income or past credit problems and who otherwise might not be able to obtain financing from traditional sources.

Forward-looking statements in this news release include the Company's recorded revenue, expense and provision for credit losses, because these items are dependent on the Company's estimates of future losses. The accuracy of such estimates may be adversely affected by various factors, which include (in addition to risks relating to the economy generally) the following: possible increased delinquencies; repossessions and losses on retail installment contracts; incorrect prepayment speed and/or discount rate assumptions; possible unavailability of qualified personnel, which could adversely affect the Company's ability to service its portfolio; possible increases in the rate of consumer bankruptcy filings or the effects of recent changes in bankruptcy law, which could adversely affect the Company's rights to collect payments from its portfolio; other changes in government regulations affecting consumer credit; possible declines in the market price for used vehicles, which could adversely affect the Company's realization upon repossessed vehicles; and economic conditions in geographic areas in which the Company's business is concentrated. All of such factors also may affect the Company's future earnings, as to which there can be no assurance.

Any implication that the results of the most recently completed quarter are indicative of future results is disclaimed, and the reader should draw no such inference. Factors such as those identified above in relation to provision for credit losses may affect future performance.

Consumer Portfolio Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

Three months ended Twelve months ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
------- ------- ------- -------
Revenues:
Interest income $102,904 $ 75,377 $370,265 $263,566
Servicing fees 550 458 1,218 2,894
Other income 6,047 4,058 23,067 12,403
-------- --------- -------- ---------
109,501 79,893 394,550 278,863
-------- --------- -------- ---------
Expenses:
Employee costs 13,012 10,133 46,716 38,483
General and administrative 6,573 6,249 24,959 23,197
Interest 39,588 27,700 139,189 93,112
Provision for credit losses 38,814 26,734 137,272 92,057
Other expenses 5,544 4,559 22,457 18,814
-------- --------- -------- ---------
103,531 75,375 370,593 265,663
-------- --------- -------- ---------
Income before income taxes 5,970 4,518 23,957 13,200
Income taxes 2,508 (26,355) 10,099 (26,355)
-------- --------- -------- ---------
Net income $ 3,462 $ 30,873 $ 13,858 $ 39,555
======== ========= ======== =========

Earnings per share:
Basic $ 0.18 $ 1.43 $ 0.66 $ 1.82
Diluted 0.17 1.30 0.61 1.64

Number of shares used in
computing earnings per
share:
Basic 19,697 21,626 20,880 21,759
Diluted 20,839 23,792 22,595 24,052

Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

December 31, December 31,
2007 2006
------------ ------------

Cash $ 20,880 $ 14,215
Restricted cash 170,341 193,001
------------ ------------
Total Cash 191,221 207,216
Finance receivables 2,068,004 1,480,794
Allowance for finance credit losses (100,138) (79,380)
------------ ------------
Finance receivables, net 1,967,866 1,401,414
Residual interest in securitizations 2,274 13,795
Deferred tax assets, net 58,835 54,669
Other assets 63,332 51,247
------------ ------------
$2,283,528 $1,728,341
============ ============

Accounts payable and other liabilities $ 36,813 $ 30,932
Warehouse lines of credit 235,925 72,950
Residual interest financing 70,000 31,378
Securitization trust debt 1,798,302 1,442,995
Senior secured debt - 25,000
Subordinated debt 28,134 13,574
------------ ------------
2,169,174 1,616,829
------------ ------------

Shareholders' equity 114,354 111,512
------------ ------------
$2,283,528 $1,728,341
============ ============

Operating and
Performance Data ($ in
thousands) At and for the At and for the
Three months ended Twelve months ended
December 31, December 31,
---------------------- ----------------------
2007 2006 2007 2006
--------- --------- --------- ---------

Contract purchases 265,765 241,361 1,282,311 1,019,018

Total managed portfolio 2,126,177 1,565,905 2,126,177 1,565,905

Average managed
portfolio 2,108,272 1,539,098 1,906,605 1,376,781

Net interest margin (1) 63,316 47,677 231,076 170,454

Risk adjusted margin
(2) 24,502 20,943 93,804 78,397

Core operating expenses
(3) 25,129 20,941 94,132 80,494
Annualized % of
average managed
portfolio 4.77% 5.44% 4.94% 5.85%

Annualized return on
managed assets (4) 1.13% 1.17% 1.26% 0.96%

Allowance as % of
finance receivables 4.84% 5.36%

Delinquencies
31+ Days 4.74% 3.99%

Repossession Inventory 1.57% 1.54%

Total Delinquencies and
Repossession Inventory 6.31% 5.53%

Annualized net charge-
offs as % of average
owned portfolio 6.34% 5.92% 5.26% 4.54%

(1) Interest income less interest expense.
(2) Net interest margin less provision for credit losses.
(3) Total expenses less interest and provision for credit losses.
(4) Pretax income divided by average managed portfolio.


CONTACT: Investor Relations Contact
Consumer Portfolio Services, Inc.
Robert E. Riedl, 949-753-6800
Erica Waldow, 888-505-9200

SOURCE: Consumer Portfolio Services, Inc.







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