Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 06, 2019 | |
Cover [Abstract] | ||
Entity Registrant Name | CONSUMER PORTFOLIO SERVICES INC | |
Entity Central Index Key | 0000889609 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-14116 | |
Entity's Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Incorporation, State or Country Code | CA | |
Entity Common Stock, Shares Outstanding | 22,530,918 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 8,799 | $ 12,787 |
Restricted cash and equivalents | 128,556 | 117,323 |
Finance receivables | 1,022,391 | 1,522,085 |
Less: Allowance for finance credit losses | (12,740) | (67,376) |
Finance receivables, net | 1,009,651 | 1,454,709 |
Finance receivables measured at fair value | 1,313,205 | 821,066 |
Furniture and equipment, net | 1,702 | 1,837 |
Deferred tax assets, net | 16,125 | 19,188 |
Accrued interest receivable | 12,729 | 31,969 |
Other assets | 46,695 | 26,801 |
Total | 2,537,462 | 2,485,680 |
Liabilities | ||
Accounts payable and accrued expenses | 55,431 | 31,692 |
Warehouse lines of credit | 157,761 | 136,847 |
Residual interest financing | 39,385 | 39,106 |
Securitization trust debt | 2,066,458 | 2,063,627 |
Subordinated renewable notes | 15,529 | 17,290 |
Total | 2,334,564 | 2,288,562 |
Shareholders' Equity | ||
Preferred stock | 0 | 0 |
Common stock, no par value; authorized 75,000,000 shares; 22,525,718 and 22,421,688 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 70,676 | 70,273 |
Retained earnings | 139,776 | 134,399 |
Accumulated other comprehensive loss | (7,554) | (7,554) |
Total stockholders' equity | 202,898 | 197,118 |
Total liabilities and stockholders' equity | 2,537,462 | 2,485,680 |
Series A Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred stock | 0 | 0 |
Series B Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred stock | $ 0 | $ 0 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
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 |
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized | 75,000,000 | 75,000,000 |
Common stock, issued | 22,525,718 | 22,421,688 |
Common stock, outstanding | 22,525,718 | 22,421,688 |
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 |
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 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues: | ||||
Interest income | $ 83,528 | $ 93,617 | $ 253,822 | $ 291,535 |
Other income | 1,994 | 2,014 | 6,255 | 7,022 |
Total revenues | 85,522 | 95,631 | 260,077 | 298,557 |
Expenses: | ||||
Employee costs | 20,251 | 18,806 | 59,030 | 59,288 |
General and administrative | 8,185 | 7,784 | 25,109 | 22,730 |
Interest | 27,940 | 25,808 | 82,933 | 75,057 |
Provision for credit losses | 19,874 | 31,959 | 64,319 | 107,997 |
Sales | 4,407 | 4,377 | 13,877 | 13,176 |
Occupancy | 1,760 | 1,935 | 5,745 | 5,644 |
Depreciation and amortization | 276 | 256 | 789 | 746 |
Total operating expenses | 82,693 | 90,925 | 251,802 | 284,638 |
Income before income tax expense | 2,829 | 4,706 | 8,275 | 13,919 |
Income tax expense | 991 | 1,508 | 2,898 | 4,409 |
Net income | $ 1,838 | $ 3,198 | $ 5,377 | $ 9,510 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.08 | $ 0.14 | $ 0.24 | $ 0.44 |
Diluted (in dollars per share) | $ 0.08 | $ 0.13 | $ 0.22 | $ 0.38 |
Number of shares used in computing earnings per share: | ||||
Basic (in shares) | 22,526 | 22,636 | 22,378 | 21,800 |
Diluted (in shares) | 24,066 | 24,735 | 24,102 | 25,178 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 1,838 | $ 3,198 | $ 5,377 | $ 9,510 |
Other comprehensive income/(loss); change in funded status of pension plan | 0 | 0 | 0 | 0 |
Comprehensive income | $ 1,838 | $ 3,198 | $ 5,377 | $ 9,510 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 5,377 | $ 9,510 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Accretion of deferred acquisition fees and origination costs | 1,374 | 2,119 |
Net interest income accretion on fair value receivables | 64,131 | 13,010 |
Depreciation and amortization | 789 | 746 |
Amortization of deferred financing costs | 6,226 | 6,430 |
Mark to fair value of finance receivables measured at fair value | (604) | 0 |
Provision for credit losses | 64,319 | 107,997 |
Stock-based compensation expense | 1,496 | 2,816 |
Changes in assets and liabilities: | ||
Accrued interest receivable | 19,240 | 10,521 |
Deferred tax assets, net | 3,063 | 3,760 |
Other assets | 2,708 | (2,892) |
Accounts payable and accrued expenses | 1,870 | 4,609 |
Net cash provided by operating activities | 169,989 | 158,626 |
Cash flows from investing activities: | ||
Payments received on finance receivables held for investment | 379,365 | 470,312 |
Purchases of finance receivables measured at fair value | (756,555) | (659,641) |
Payments received on finance receivables at fair value | 200,889 | 31,824 |
Change in repossessions held in inventory | (733) | 624 |
Purchase of furniture and equipment | (654) | (795) |
Net cash used in investing activities | (177,688) | (157,676) |
Cash flows from financing activities: | ||
Proceeds from issuance of securitization trust debt | 726,188 | 622,098 |
Proceeds from issuance of subordinated renewable notes | 1,452 | 2,226 |
Payments on subordinated renewable notes | (3,213) | (1,844) |
Net advances of warehouse lines of credit | 20,914 | 15,005 |
Net advances of residual interest financing debt | 0 | 40,000 |
Repayment of securitization trust debt | (723,205) | (671,700) |
Payment of financing costs | (6,099) | (6,467) |
Purchase of common stock | (1,440) | (4,437) |
Exercise of options and warrants | 347 | 483 |
Net cash provided by (used in) financing activities | 14,944 | (4,636) |
Increase in cash and cash equivalents | 7,245 | (3,686) |
Cash and restricted cash at beginning of period | 130,110 | 124,696 |
Cash and restricted cash at end of period | 137,355 | 121,010 |
Supplemental disclosure of cash flow information: | ||
Interest | 76,269 | 68,042 |
Income taxes | (3,231) | 7,256 |
Non-cash financing activities: | ||
Right-of-use asset, net | (21,869) | 0 |
Lease liability | 23,327 | 0 |
Deferred office rent | $ (1,458) | $ 0 |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Beginning balance, shares at Dec. 31, 2017 | 21,489 | |||
Beginning balance, value at Dec. 31, 2017 | $ 71,582 | $ 119,537 | $ (7,182) | |
Common stock issued upon exercise of options and warrants, shares | 2,316 | |||
Common stock issued upon exercise of options and warrants, value | $ 483 | |||
Repurchase of common stock, shares | (1,149) | |||
Repurchase of common stock, value | $ (4,437) | |||
Stock-based compensation | $ 2,816 | |||
Pension benefit obligation | 0 | $ 0 | ||
Net income | 9,510 | 9,510 | ||
Ending balance, shares at Sep. 30, 2018 | 22,656 | |||
Ending balance, value at Sep. 30, 2018 | $ 70,444 | 129,047 | (7,182) | 192,309 |
Beginning balance, shares at Jun. 30, 2018 | 20,963 | |||
Beginning balance, value at Jun. 30, 2018 | $ 70,955 | 125,849 | (7,182) | |
Common stock issued upon exercise of options and warrants, shares | 2,003 | |||
Common stock issued upon exercise of options and warrants, value | $ 3 | |||
Repurchase of common stock, shares | (310) | |||
Repurchase of common stock, value | $ (1,177) | |||
Stock-based compensation | $ 663 | |||
Pension benefit obligation | 0 | 0 | ||
Net income | 3,198 | 3,198 | ||
Ending balance, shares at Sep. 30, 2018 | 22,656 | |||
Ending balance, value at Sep. 30, 2018 | $ 70,444 | 129,047 | (7,182) | 192,309 |
Beginning balance, shares at Dec. 31, 2018 | 22,422 | |||
Beginning balance, value at Dec. 31, 2018 | $ 70,273 | 134,399 | (7,554) | 197,118 |
Common stock issued upon exercise of options and warrants, shares | 483 | |||
Common stock issued upon exercise of options and warrants, value | $ 347 | |||
Repurchase of common stock, shares | (379) | |||
Repurchase of common stock, value | $ (1,440) | |||
Stock-based compensation | $ 1,496 | |||
Pension benefit obligation | 0 | 0 | ||
Net income | 5,377 | 5,377 | ||
Ending balance, shares at Sep. 30, 2019 | 22,526 | |||
Ending balance, value at Sep. 30, 2019 | $ 70,676 | 139,776 | (7,554) | 202,898 |
Beginning balance, shares at Jun. 30, 2019 | 22,526 | |||
Beginning balance, value at Jun. 30, 2019 | $ 70,299 | 137,938 | (7,554) | |
Common stock issued upon exercise of options and warrants, value | 0 | |||
Repurchase of common stock, value | 0 | |||
Stock-based compensation | $ 377 | |||
Pension benefit obligation | 0 | 0 | ||
Net income | 1,838 | 1,838 | ||
Ending balance, shares at Sep. 30, 2019 | 22,526 | |||
Ending balance, value at Sep. 30, 2019 | $ 70,676 | $ 139,776 | $ (7,554) | $ 202,898 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (1) Summary of Significant Accounting Policies Description of Business We were formed in California on March 8, 1991. We specialize in purchasing and servicing retail automobile installment sale contracts (“automobile contracts” or “finance receivables”) originated by licensed motor vehicle dealers located throughout the United States (“dealers”) in the sale of new and used automobiles, light trucks and passenger vans. Through our purchases, we provide indirect financing to dealer customers for borrowers with limited credit histories or past credit problems (“sub-prime customers”). We serve as an alternative source of financing for dealers, allowing sales to customers who otherwise might not be able to obtain financing. In addition to purchasing installment purchase contracts directly from dealers, we have also (i) lent money directly to consumers for loans secured by vehicles, (ii) purchased immaterial amounts of vehicle purchase money loans from non-affiliated lenders, and (iii) acquired installment purchase contracts in four merger and acquisition transactions. In this report, we refer to all of such contracts and loans as "automobile contracts." Basis of Presentation Our Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, with the instructions to Form 10-Q and with Article 10 of Regulation S-X of the Securities and Exchange Commission, and include all adjustments that are, in management’s opinion, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. Results for the nine month period ended September 30, 2019 are not necessarily indicative of the operating results to be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these Unaudited Condensed Consolidated Financial Statements. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. 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. Finance Receivables Measured at Fair Value Effective January 1, 2018, we adopted the fair value method of accounting for finance receivables acquired on or after that date. For each finance receivable acquired after 2017, we consider the price paid on the purchase date as the fair value for such receivable. We estimate the cash to be received in the future with respect to such receivables, based on our experience with similar receivables acquired in the past. We then compute the internal rate of return that results in the present value of those estimated cash receipts being equal to the purchase date fair value. Thereafter, we recognize interest income on such receivables on a level yield basis using that internal rate of return as the applicable interest rate. Cash received with respect to such receivables is applied first against such interest income, and then to reduce the carrying value of the receivables. We re-evaluate the fair value of such receivables at the close of each measurement period. If the reevaluation were to yield a value materially different from the carrying value, an adjustment would be required. In the three-month period ended September 30, 2019, the net present value of the forecasted cash flows for the receivables acquired in the first quarter of 2018 exceeded the carrying value of that pool by $604,000, which we have recorded as a mark to market value of that pool of receivables. Anticipated credit losses are included in our estimation of cash to be received with respect to receivables. Because such credit losses are included in our computation of the appropriate level yield, we do not thereafter make periodic provision for credit losses, as our best estimate of the lifetime aggregate of credit losses is included in that initial computation. Also because we include anticipated credit losses in our computation of the level yield, the computed level yield is materially lower than the average contractual rate applicable to the receivables. Because our initial carrying value is fixed as the price we pay for the receivable, rather than as the contractual principal balance, we do not record acquisition fees as an amortizing asset related to the receivables, nor do we capitalize costs of acquiring the receivables. Rather we recognize the costs of acquisition as expenses in the period incurred. Other Income The following table presents the primary components of Other Income for the three-month and nine-month periods ending September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Direct mail revenues $ 1,121 $ 1,328 $ 3,508 $ 4,833 Convenience fee revenue 600 360 1,870 1,200 Recoveries on previously charged-off contracts 30 44 132 198 Sales tax refunds 200 220 631 658 Other 43 62 114 133 Other income for the period $ 1,994 $ 2,014 $ 6,255 $ 7,022 On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”. The majority of the Company’s revenues come from interest income which is outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented within Other Income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 include revenue associated with direct mail and other related products and services that we offer to our dealers. Leases Effective January 1, 2019, the Company adopted guidance Accounting Standards Update (“ASU 2016-02”) Topic 842, “Leases” using the modified retrospective transition method. Prior comparable periods are presented accordance with previous guidance under Accounting Standards Codification (“ASC”) Topic 840, “Leases.” The Company also elected the package of practical expedients, ASU 2018-11. This election allowed the Company to not reassess if expired or existing contracts contain leases, to not reassess lease classifications for any expired or existing leases and to not reassess existing leases initial direct costs. We determine if a contract contains a lease at contract inception. Right-of-use assets and liabilities are recognized based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use the Company’s incremental borrowing rate. Right-of-use assets are included in other assets and lease liabilities are included in accounts payable and accrued expenses in our Unaudited Condensed Consolidated Balance Sheet at September 30, 2019. The Company has operating leases for corporate offices, equipment, software and hardware. The Company has entered into operating leases for the majority of its real estate locations, primarily office space. These leases are generally for periods of three to seven years with various renewal options. The depreciable life of leased assets is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term. The following table presents the supplemental balance sheet information related to leases: Nine Months Ended, September 30, 2019 (In thousands) Operating Leases Operating lease right-of-use assets $ 23,555 Less: Accumulated amortization right-of-use assets (4,986 ) Operating lease right-of-use assets, net $ 18,569 Operating lease liabilities $ (20,005 ) Finance Leases Property and equipment, at cost $ 545 Less: Accumulated depreciation (84 ) Property and equipment, net $ 461 Finance lease liabilities $ (447 ) Weighted Average Discount Rate Operating lease 5.0% Finance lease 6.7% Maturities of lease liabilities were as follows: (In thousands) Operating Finance Year Ending December 31, Lease Lease 2019 (excluding the nine months ended September 30, 2019) $ 1,908 $ 46 2020 7,500 183 2021 7,391 183 2022 6,125 60 2023 1,389 18 Thereafter 689 6 Total undiscounted lease payments 25,002 496 Less amounts representing interest (4,997 ) (49 ) Lease Liability $ 20,005 $ 447 The following table presents the leases expense included in Occupancy, General and administrative on our Unaudited Condensed Consolidated Statement of Operations: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Operating lease cost $ 1,884 $ 1,785 $ 5,659 $ 5,290 Finance lease cost 46 – 90 – Total lease cost $ 1,930 $ 1,785 $ 5,749 $ 5,290 The following table presents the supplemental cash flow information related to leases: Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: $ Operating cash flows from operating leases $ 1,901 $ 5,678 Operating cash flows from finance leases 37 73 Financing cash flows from finance leases 9 17 Stock-based Compensation We recognize compensation costs in the financial statements for all share-based payments based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. For the three and nine months ended September 30, 2019, we recorded stock-based compensation costs in the amount of $377,000 and $1.5 million, respectively. These stock-based compensation costs were $663,000 and $2.8 million for the three and nine months ended September 30, 2018. As of September 30, 2019, unrecognized stock-based compensation costs to be recognized over future periods equaled $2.1 million. This amount will be recognized as expense over a weighted-average period of 2.3 years. The following represents stock option activity for the nine months ended September 30, 2019: Number of Shares Weighted Average Exercise Weighted Average Remaining Contractual (in thousands) Price Term Options outstanding at the beginning of period 14,421 $ 4.57 N/A Granted 1,490 3.53 N/A Exercised (483 ) 0.86 N/A Forfeited (75 ) 4.00 N/A Options outstanding at the end of period 15,353 4.58 3.59 years Options exercisable at the end of period 11,722 $ 4.87 2.94 years At September 30, 2019, the aggregate intrinsic value of options outstanding and exercisable was $5.8 million and $5.5 million, respectively. There were 482,500 options exercised for the nine months ended September 30, 2019 compared to 315,500 for the comparable period in 2018. The total intrinsic value of options exercised was $1.4 million and $869,000 for the nine-month periods ended September 30, 2019 and 2018. There were 1,458,000 shares available for future stock option grants under existing plans as of September 30, 2019. Purchases of Company Stock The table below describes the purchase of our common stock for the nine-month ended September 30, 2019 and 2018: Nine Months Ended September 30, 2019 September 30, 2018 Shares Avg. Price Shares Avg. Price Open market purchases 335,546 $ 3.95 714,898 $ 3.81 Shares redeemed upon net exercise of stock options 18,424 3.76 33,599 4.37 Other purchases 24,500 4.20 90,000 4.13 Total stock purchases 378,470 $ 3.97 838,497 $ 3.87 Reclassifications Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on net income or shareholders’ equity. Financial Covenants Certain of our securitization transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. As of September 30, 2019, we were in compliance with all such covenants. In addition, certain of our debt agreements other than our term securitizations contain cross-default provisions. Such cross-default provisions would allow the respective creditors to declare a default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be accompanied by acceleration of such other indebtedness. 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 record at each measurement date, most recently as of September 30, 2019, our best estimate of probable incurred losses for legal contingencies. The amount of losses that may ultimately be incurred cannot be estimated with certainty. Adoption of New Accounting Standards 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. ASU 2016-13 was initially scheduled to become effective for interim and annual reporting periods beginning after December 15, 2019, however on October 16, 2019, the FASB changed the effective date for smaller reporting companies to interim and annual reporting periods arly adoption would still be permitted for interim and annual reporting periods beginning after December 15, 2019. |
2. Finance Receivables
2. Finance Receivables | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Finance Receivables | (2) 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. For key terms such as interest rate, length of contract, monthly payment and amount financed, there is relatively little variation from the average for the 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. In January 2018 the Company adopted the fair value method of accounting for finance receivables acquired after 2017. Finance receivables measured at fair value are recorded separately on the Company’s Balance Sheet and are excluded from all tables in this footnote. The following table presents the components of Finance Receivables, net of unearned interest: September 30, December 31, 2019 2018 (In thousands) Finance receivables Automobile finance receivables, net of unearned interest $ 1,020,044 $ 1,518,395 Unearned acquisition fees and originations costs 2,347 3,690 Finance receivables $ 1,022,391 $ 1,522,085 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 included. In certain circumstances we will grant obligors one-month payment extensions to assist them with temporary cash flow problems. 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 September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 (In thousands) Delinquency Status Current $ 804,537 $ 1,262,730 31 - 60 days 124,214 157,688 61 - 90 days 65,046 66,134 91 + days 26,247 31,843 $ 1,020,044 $ 1,518,395 Finance receivables totaling $26.2 million and $31.8 million at September 30, 2019 and December 31, 2018, respectively, including all receivables greater than 90 days delinquent, have been placed on non-accrual status as a result of their delinquency status. We use a loss allowance methodology commonly referred to as " " The following table presents a summary of the activity for the allowance for finance credit losses for the three-months and nine-month periods ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Balance at beginning of period $ 32,664 $ 94,376 $ 67,376 $ 109,187 Provision for credit losses on finance receivables 19,874 31,959 64,319 107,997 Charge-offs (46,118 ) (54,033 ) (149,038 ) (163,628 ) Recoveries 6,320 10,170 30,083 28,916 Balance at end of period $ 12,740 $ 82,472 $ 12,740 $ 82,472 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 in repossessed inventory that is not included in the allowance for finance credit losses: September 30, December 31, 2019 2018 (In thousands) Gross balance of repossessions in inventory $ 37,481 $ 33,462 Allowance for losses on repossessed inventory (27,851 ) (24,564 ) Net repossessed inventory included in other assets $ 9,630 $ 8,898 |
3. Securitization Trust Debt
3. Securitization Trust Debt | 9 Months Ended |
Sep. 30, 2019 | |
Securitization Trust Debt | |
Securitization Trust Debt | (3) Securitization Trust Debt We have completed many securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our Unaudited Condensed Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table: Final Receivables Pledged at September 30, Initial Outstanding Principal at September 30, Outstanding Principal at December 31, Weighted Series Date (1) 2019 (2) Principal 2019 2018 2019 (Dollars in thousands) CPS 2014-A June 2021 – 180,000 – 15,328 – CPS 2014-B September 2021 – 202,500 – 24,051 – CPS 2014-C December 2021 24,989 273,000 23,997 40,896 5.04% CPS 2014-D March 2022 28,979 267,500 28,550 46,489 5.33% CPS 2015-A June 2022 34,107 245,000 32,069 52,448 5.09% CPS 2015-B September 2022 41,879 250,000 42,412 64,591 4.97% CPS 2015-C December 2022 61,129 300,000 61,648 90,639 5.59% CPS 2016-A March 2023 80,790 329,460 81,833 119,444 5.82% CPS 2016-B June 2023 96,470 332,690 94,181 135,688 6.13% CPS 2016-C September 2023 96,780 318,500 94,589 136,114 6.06% CPS 2016-D April 2024 75,637 206,325 74,176 104,645 4.51% CPS 2017-A April 2024 83,017 206,320 80,887 113,527 4.61% CPS 2017-B December 2023 100,865 225,170 87,633 127,726 3.96% CPS 2017-C September 2024 102,834 224,825 91,654 131,845 3.88% CPS 2017-D June 2024 104,368 196,300 95,003 132,919 3.55% CPS 2018-A March 2025 112,179 190,000 103,008 142,643 3.50% CPS 2018-B December 2024 131,373 201,823 124,822 167,809 3.87% CPS 2018-C September 2025 157,848 230,275 148,605 204,418 3.94% CPS 2018-D June 2025 183,774 233,730 169,869 224,189 3.95% CPS 2019-A March 2026 222,685 254,400 206,977 – 3.87% CPS 2019-B June 2026 209,982 228,275 202,163 – 3.52% CPS 2019-C December 2026 237,068 243,513 234,315 – 2.98% $ 2,186,753 $ 5,339,606 $ 2,078,391 $ 2,075,409 (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 $214.6 million in 2019, $743.3 million in 2020, $523.0 million in 2021, $312.6 million in 2022, $216.5 million in 2023, $43.6 million in 2024, $13.0 million in 2025. (2) Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet. Debt issuance costs of $11.9 million and $11.8 million as of September 30, 2019 and December 31, 2018, 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 Unaudited Condensed Consolidated Balance Sheets. All of the securitization trust debt was sold in private placement transactions to qualified institutional buyers. The debt was issued through our wholly-owned bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by our other assets. The terms of the securitization agreements related to the issuance of the securitization trust debt and the warehouse credit facilities require that we meet certain delinquency and credit loss criteria with respect to the pool of receivables, and certain of the agreements require that we maintain minimum levels of liquidity and not exceed maximum leverage levels. As of September 30, 2019, we were in compliance with all such covenants. We are responsible for the administration and collection of the automobile contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional collateral for the borrowings, to be applied to make payments on the securitization trust debt or as pre-funding proceeds from a term securitization prior to the purchase of additional collateral. As of September 30, 2019, restricted cash under the various agreements totaled approximately $128.6 million. Interest expense on the securitization trust debt consists of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, amortization of deferred financing costs and discounts on notes sold. Deferred financing costs and discounts on notes sold related to the securitization trust debt are amortized using a level yield method. Accordingly, the effective cost of the securitization trust debt is greater than the contractual rate of interest disclosed above. 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 credit facilities. 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 other creditors. On October 16, 2019 we completed our fourth securitization transaction of 2019. In the transaction, qualified institutional buyers purchased $274.3 million of asset-backed notes secured by $275 million in automobile receivables purchased by us. The sold notes, issued by CPS Auto Receivables Trust 2019-D, consist of six classes. Ratings of the notes were provided by Standard & Poor’s and Kroll Bond Rating Agency, and were based on the structure of the transaction, the historical performance of similar receivables and CPS’s experience as a servicer. The weighted average yield on the notes is approximately 2.95%. |
4. Debt
4. Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | (4) Debt The terms and amounts of our other debt outstanding at September 30, 2019 and December 31, 2018 are summarized below: Amount Outstanding at September 30, December 31, 2019 2018 (In thousands) Description Interest Rate Maturity Warehouse lines of credit 5.50% over one month Libor (Minimum 6.50%) February 2021 $ 35,264 $ 38,198 3.00% over one month Libor (Minimum 3.75%) September 2020 96,154 99,885 6.75% over a commercial paper rate (Minimum 7.75%) November 2019 27,578 – Residual interest financing 8.60% January 2026 40,000 40,000 Subordinated renewable notes Weighted average rate of 9.22% and 8.53% at September 30, 2019 and December 31, 2018, respectively Weighted average maturity of December 2021 and January 2021 at September 30, 2019 and December 31, 2018, respectively 15,529 17,290 $ 214,525 $ 195,373 Unamortized debt issuance costs of $615,000 and $894,000 as of September 30, 2019 and December 31, 2018, respectively, have been excluded from the amount reported above for residual interest financing. Similarly, unamortized debt issuance costs of $1.2 million and $1.2 million as of September 30, 2019 and December 31, 2018, respectively, have been excluded from the Warehouse lines of credit amounts in the table above. These debt issuance costs are presented as a direct deduction to the carrying amount of the debt on our Unaudited Condensed Consolidated Balance Sheets. |
5. Interest Income and Interest
5. Interest Income and Interest Expense | 9 Months Ended |
Sep. 30, 2019 | |
Banking and Thrift [Abstract] | |
Interest Income and Interest Expense | (5) Interest Income and Interest Expense The following table presents the components of interest income: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Interest on finance receivables $ 49,912 $ 79,573 $ 167,862 $ 264,545 Interest on finance receivables at fair value 32,903 13,482 83,696 25,822 Other interest income 713 562 2,264 1,168 Interest income $ 83,528 $ 93,617 $ 253,822 $ 291,535 The following table presents the components of interest expense: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Securitization trust debt $ 24,208 $ 22,678 $ 72,662 $ 66,762 Warehouse lines of credit 2,407 1,827 6,387 5,850 Residual interest financing 956 936 2,867 1,387 Subordinated renewable notes 369 367 1,017 1,058 Interest expense $ 27,940 $ 25,808 $ 82,933 $ 75,057 |
6. Earnings Per Share
6. Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings per share: | |
Earnings Per Share | (6) Earnings Per Share Earnings per share for the three-months and nine-month periods ended September 30, 2019 and 2018 were calculated using the weighted average number of shares outstanding for the related period. The following table reconciles the number of shares used in the computations of basic and diluted earnings per share for the three-months and nine-month periods ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Weighted average number of common shares outstanding during the period used to compute basic earnings per share 22,526 22,636 22,378 21,800 Incremental common shares attributable to exercise of outstanding options and warrants 1,540 2,099 1,724 3,378 Weighted average number of common shares used to compute diluted earnings per share 24,066 24,735 24,102 25,178 If the anti-dilutive effects of common stock equivalents were considered, shares included in the diluted earnings per share calculation for the three-month and nine-month periods ended September 30, 2019 would have included an additional 10.6 million and 10.6 million shares, respectively, attributable to the exercise of outstanding options and warrants. For the three-month and nine-month periods ended September 30, 2018, an additional 11.0 million and 10.1 million shares, respectively, would be included in the diluted earnings per share calculation. |
7. Income Taxes
7. Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (7) Income Taxes We file numerous consolidated and separate income tax returns with the United States and with many states. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2013. As of September 30, 2019 and December 31, 2018, we had no unrecognized tax benefits for uncertain tax positions. We do not anticipate that total unrecognized tax benefits will significantly change due to any settlements of audits or expirations of statutes of limitations over the next 12 months. 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. 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 judgments, 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 $16.1 million as of September 30, 2019 is more likely than not based on forecasted future net earnings. Our net deferred tax asset of $16.1 million consists of approximately $11.5 million of net U.S. federal deferred tax assets and $4.6 million of net state deferred tax assets. Income tax expense was $991,000 and $2.9 million for the three months and nine months ended September 30, 2019 and represents an effective income tax rate of 35%, compared to income tax expense of $1.5 million and $4.4 million for the three and nine months ended September 30, 2018, and represents an effective income tax rate of 32%. |
8. Legal Proceedings
8. Legal Proceedings | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | (8) 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. Wage and Hour Claim. We believe that our compensation practices with respect to our sales representatives are compliant with applicable law. Accordingly, we have defended and intend to continue to defend this lawsuit. We have not recorded a liability with respect to this claim on the accompanying consolidated financial statements . 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 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. |
9. Fair Value Measurements
9. Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | (9) 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 would be 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. Effective January 2018 we have elected to use the fair value method to value our portfolio of finance receivables acquired in January 2018 and thereafter. Our valuation policies and procedures have been developed by our Accounting department in conjunction with our Risk department and with consultation with outside valuation experts. Our policies and procedures have been approved by our Chief Executive and our Board of Directors and include methodologies for valuation, internal reporting, calibration and back testing. Our periodic review of valuations includes an analysis of changes in fair value measurements and documentation of the reasons for such changes. There is little available third-party information such as broker quotes or pricing services available to assist us in our valuation process. Our level 3, unobservable inputs reflect our own assumptions about the factors that market participants use in pricing similar receivables and are based on the best information available in the circumstances. They include such inputs as estimates for the magnitude and timing of net charge-offs and the rate of amortization of the portfolio of finance receivable. Significant changes in any of those inputs in isolation would have a significant impact on our fair value measurement. The table below presents a reconciliation of the finance receivables measured at fair value on a recurring basis using significant unobservable inputs: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Balance at beginning of period $ 1,158,365 $ 412,895 $ 821,066 $ – Finance receivables at fair value acquired during period 261,929 229,030 756,555 659,641 Payments received on finance receivables at fair value (83,384 ) (18,851 ) (200,889 ) (31,824 ) Net interest income accretion on fair value receivables (24,309 ) (8,267 ) (64,131 ) (13,010 ) Mark to fair value 604 – 604 – Balance at end of period $ 1,313,205 $ 614,807 $ 1,313,205 $ 614,807 The table below compares the fair values of these finance receivables to their contractual balances for the periods shown: September 30, 2019 December 31, 2018 Contractual Fair Contractual Fair Balance Value Balance Value (In thousands) Finance receivables measured at fair value $ 1,356,157 $ 1,313,205 $ 829,039 $ 821,066 The following table provides certain qualitative information about our level 3 fair value measurements: Financial Instrument Fair Values as of Inputs as of September 30, December 31, September 30, December 31, 2019 2018 Unobservable Inputs 2019 2018 (In thousands) Assets: Finance receivables measured at fair value $ 1,313,205 $ 821,066 Discount rate Cumulative net losses 8.9% - 11.1% 15.0% - 16.1% 8.9% - 9.9% 15.0% - 16.0% The following table summarizes the delinquency status of these finance receivables measured at fair value as of September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 (In thousands) Delinquency Status Current $ 1,242,569 $ 790,727 31 - 60 days 70,802 26,285 61 - 90 days 29,557 8,350 91 + days 13,229 3,677 $ 1,356,157 $ 829,039 Repossessed vehicle inventory, which is included in Other assets on our unaudited condensed consolidated balance sheet, is measured at fair value using level 2 assumptions based on our actual loss experience on sale of repossessed vehicles. At September 30, 2019 the finance receivables related to the repossessed vehicles in inventory totaled $37.5 million. We have applied a valuation adjustment, or loss allowance, of $27.9 million, which is based on a recovery rate of approximately 26%, resulting in an estimated fair value and carrying amount of $9.6 million. The fair value and carrying amount of the repossessed inventory at December 31, 2018 was $8.9 million after applying a valuation adjustment of $24.6 million. There were no transfers in or out of level 1, level 2 or level 3 assets and liabilities for the three months ended September 30, 2019 and 2018. The estimated fair values of financial assets and liabilities at September 30, 2019 and December 31, 2018, were as follows: As of September 30, 2019 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 8,799 $ 8,799 $ – $ – $ 8,799 Restricted cash and equivalents 128,556 128,556 – – 128,556 Finance receivables, net 1,009,651 – – 964,540 964,540 Accrued interest receivable 12,729 – – 12,729 12,729 Liabilities: Warehouse lines of credit $ 157,761 $ – $ – $ 157,761 $ 157,761 Accrued interest payable 5,257 – – 5,257 5,257 Residual interest financing 39,385 – – 39,385 39,385 Securitization trust debt 2,066,458 – – 2,095,487 2,095,487 Subordinated renewable notes 15,529 – – 15,529 15,529 As of December 31, 2018 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 12,787 $ 12,787 $ – $ – $ 12,787 Restricted cash and equivalents 117,323 117,323 – – 117,323 Finance receivables, net 1,454,709 – – 1,434,631 1,434,631 Accrued interest receivable 31,969 – – 31,969 31,969 Liabilities: Warehouse lines of credit $ 136,847 $ – $ – $ 136,847 $ 136,847 Accrued interest payable 4,819 – – 4,819 4,819 Residual interest financing 39,106 – – 39,106 39,106 Securitization trust debt 2,063,627 – – 2,051,920 2,051,920 Subordinated renewable notes 17,290 – – 17,290 17,290 |
1. Summary of Significant Acc_2
1. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business We were formed in California on March 8, 1991. We specialize in purchasing and servicing retail automobile installment sale contracts (“automobile contracts” or “finance receivables”) originated by licensed motor vehicle dealers located throughout the United States (“dealers”) in the sale of new and used automobiles, light trucks and passenger vans. Through our purchases, we provide indirect financing to dealer customers for borrowers with limited credit histories or past credit problems (“sub-prime customers”). We serve as an alternative source of financing for dealers, allowing sales to customers who otherwise might not be able to obtain financing. In addition to purchasing installment purchase contracts directly from dealers, we have also (i) lent money directly to consumers for loans secured by vehicles, (ii) purchased immaterial amounts of vehicle purchase money loans from non-affiliated lenders, and (iii) acquired installment purchase contracts in four merger and acquisition transactions. In this report, we refer to all of such contracts and loans as "automobile contracts." |
Basis of Presentation | Basis of Presentation Our Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, with the instructions to Form 10-Q and with Article 10 of Regulation S-X of the Securities and Exchange Commission, and include all adjustments that are, in management’s opinion, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. Results for the nine month period ended September 30, 2019 are not necessarily indicative of the operating results to be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these Unaudited Condensed Consolidated Financial Statements. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. |
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. |
Finance Receivables Measured at Fair Value | Finance Receivables Measured at Fair Value Effective January 1, 2018, we adopted the fair value method of accounting for finance receivables acquired on or after that date. For each finance receivable acquired after 2017, we consider the price paid on the purchase date as the fair value for such receivable. We estimate the cash to be received in the future with respect to such receivables, based on our experience with similar receivables acquired in the past. We then compute the internal rate of return that results in the present value of those estimated cash receipts being equal to the purchase date fair value. Thereafter, we recognize interest income on such receivables on a level yield basis using that internal rate of return as the applicable interest rate. Cash received with respect to such receivables is applied first against such interest income, and then to reduce the carrying value of the receivables. We re-evaluate the fair value of such receivables at the close of each measurement period. If the reevaluation were to yield a value materially different from the carrying value, an adjustment would be required. In the three-month period ended September 30, 2019, the net present value of the forecasted cash flows for the receivables acquired in the first quarter of 2018 exceeded the carrying value of that pool by $604,000, which we have recorded as a mark to market value of that pool of receivables. Anticipated credit losses are included in our estimation of cash to be received with respect to receivables. Because such credit losses are included in our computation of the appropriate level yield, we do not thereafter make periodic provision for credit losses, as our best estimate of the lifetime aggregate of credit losses is included in that initial computation. Also because we include anticipated credit losses in our computation of the level yield, the computed level yield is materially lower than the average contractual rate applicable to the receivables. Because our initial carrying value is fixed as the price we pay for the receivable, rather than as the contractual principal balance, we do not record acquisition fees as an amortizing asset related to the receivables, nor do we capitalize costs of acquiring the receivables. Rather we recognize the costs of acquisition as expenses in the period incurred. |
Other Income | Other Income The following table presents the primary components of Other Income for the three-month and nine-month periods ending September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Direct mail revenues $ 1,121 $ 1,328 $ 3,508 $ 4,833 Convenience fee revenue 600 360 1,870 1,200 Recoveries on previously charged-off contracts 30 44 132 198 Sales tax refunds 200 220 631 658 Other 43 62 114 133 Other income for the period $ 1,994 $ 2,014 $ 6,255 $ 7,022 On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”. The majority of the Company’s revenues come from interest income which is outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented within Other Income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 include revenue associated with direct mail and other related products and services that we offer to our dealers. |
Leases | Leases Effective January 1, 2019, the Company adopted guidance Accounting Standards Update (“ASU 2016-02”) Topic 842, “Leases” using the modified retrospective transition method. Prior comparable periods are presented accordance with previous guidance under Accounting Standards Codification (“ASC”) Topic 840, “Leases.” The Company also elected the package of practical expedients, ASU 2018-11. This election allowed the Company to not reassess if expired or existing contracts contain leases, to not reassess lease classifications for any expired or existing leases and to not reassess existing leases initial direct costs. We determine if a contract contains a lease at contract inception. Right-of-use assets and liabilities are recognized based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use the Company’s incremental borrowing rate. Right-of-use assets are included in other assets and lease liabilities are included in accounts payable and accrued expenses in our Unaudited Condensed Consolidated Balance Sheet at September 30, 2019. The Company has operating leases for corporate offices, equipment, software and hardware. The Company has entered into operating leases for the majority of its real estate locations, primarily office space. These leases are generally for periods of three to seven years with various renewal options. The depreciable life of leased assets is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term. The following table presents the supplemental balance sheet information related to leases: Nine Months Ended, September 30, 2019 (In thousands) Operating Leases Operating lease right-of-use assets $ 23,555 Less: Accumulated amortization right-of-use assets (4,986 ) Operating lease right-of-use assets, net $ 18,569 Operating lease liabilities $ (20,005 ) Finance Leases Property and equipment, at cost $ 545 Less: Accumulated depreciation (84 ) Property and equipment, net $ 461 Finance lease liabilities $ (447 ) Weighted Average Discount Rate Operating lease 5.0% Finance lease 6.7% Maturities of lease liabilities were as follows: (In thousands) Operating Finance Year Ending December 31, Lease Lease 2019 (excluding the nine months ended September 30, 2019) $ 1,908 $ 46 2020 7,500 183 2021 7,391 183 2022 6,125 60 2023 1,389 18 Thereafter 689 6 Total undiscounted lease payments 25,002 496 Less amounts representing interest (4,997 ) (49 ) Lease Liability $ 20,005 $ 447 The following table presents the leases expense included in Occupancy, General and administrative on our Unaudited Condensed Consolidated Statement of Operations: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Operating lease cost $ 1,884 $ 1,785 $ 5,659 $ 5,290 Finance lease cost 46 – 90 – Total lease cost $ 1,930 $ 1,785 $ 5,749 $ 5,290 The following table presents the supplemental cash flow information related to leases: Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: $ Operating cash flows from operating leases $ 1,901 $ 5,678 Operating cash flows from finance leases 37 73 Financing cash flows from finance leases 9 17 |
Stock-based Compensation | Stock-based Compensation We recognize compensation costs in the financial statements for all share-based payments based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. For the three and nine months ended September 30, 2019, we recorded stock-based compensation costs in the amount of $377,000 and $1.5 million, respectively. These stock-based compensation costs were $663,000 and $2.8 million for the three and nine months ended September 30, 2018. As of September 30, 2019, unrecognized stock-based compensation costs to be recognized over future periods equaled $2.1 million. This amount will be recognized as expense over a weighted-average period of 2.3 years. The following represents stock option activity for the nine months ended September 30, 2019: Number of Shares Weighted Average Exercise Weighted Average Remaining Contractual (in thousands) Price Term Options outstanding at the beginning of period 14,421 $ 4.57 N/A Granted 1,490 3.53 N/A Exercised (483 ) 0.86 N/A Forfeited (75 ) 4.00 N/A Options outstanding at the end of period 15,353 4.58 3.59 years Options exercisable at the end of period 11,722 $ 4.87 2.94 years At September 30, 2019, the aggregate intrinsic value of options outstanding and exercisable was $5.8 million and $5.5 million, respectively. There were 482,500 options exercised for the nine months ended September 30, 2019 compared to 315,500 for the comparable period in 2018. The total intrinsic value of options exercised was $1.4 million and $869,000 for the nine-month periods ended September 30, 2019 and 2018. There were 1,458,000 shares available for future stock option grants under existing plans as of September 30, 2019. |
Purchases of Company Stock | Purchases of Company Stock The table below describes the purchase of our common stock for the nine-month ended September 30, 2019 and 2018: Nine Months Ended September 30, 2019 September 30, 2018 Shares Avg. Price Shares Avg. Price Open market purchases 335,546 $ 3.95 714,898 $ 3.81 Shares redeemed upon net exercise of stock options 18,424 3.76 33,599 4.37 Other purchases 24,500 4.20 90,000 4.13 Total stock purchases 378,470 $ 3.97 838,497 $ 3.87 |
Reclassifications | Reclassifications Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on net income or shareholders’ equity. |
Financial Covenants | Financial Covenants Certain of our securitization transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. As of September 30, 2019, we were in compliance with all such covenants. In addition, certain of our debt agreements other than our term securitizations contain cross-default provisions. Such cross-default provisions would allow the respective creditors to declare a default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be accompanied by acceleration of such other indebtedness. |
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 record at each measurement date, most recently as of September 30, 2019, our best estimate of probable incurred losses for legal contingencies. The amount of losses that may ultimately be incurred cannot be estimated with certainty. |
Adoption of New Accounting Standards | Adoption of New Accounting Standards 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. ASU 2016-13 was initially scheduled to become effective for interim and annual reporting periods beginning after December 15, 2019, however on October 16, 2019, the FASB changed the effective date for smaller reporting companies to interim and annual reporting periods arly adoption would still be permitted for interim and annual reporting periods beginning after December 15, 2019. |
1. Summary of Significant Acc_3
1. Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of other Income | The following table presents the primary components of Other Income for the three-month and nine-month periods ending September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Direct mail revenues $ 1,121 $ 1,328 $ 3,508 $ 4,833 Convenience fee revenue 600 360 1,870 1,200 Recoveries on previously charged-off contracts 30 44 132 198 Sales tax refunds 200 220 631 658 Other 43 62 114 133 Other income for the period $ 1,994 $ 2,014 $ 6,255 $ 7,022 |
Operating lease table | The following table presents the supplemental balance sheet information related to leases: Nine Months Ended, September 30, 2019 (In thousands) Operating Leases Operating lease right-of-use assets $ 23,555 Less: Accumulated amortization right-of-use assets (4,986 ) Operating lease right-of-use assets, net $ 18,569 Operating lease liabilities $ (20,005 ) |
Finance lease table | The following table presents the supplemental balance sheet information related to leases: Nine Months Ended, September 30, 2019 (In thousands) Finance Leases Property and equipment, at cost $ 545 Less: Accumulated depreciation (84 ) Property and equipment, net $ 461 Finance lease liabilities $ (447 ) |
Maturities of lease liabilities | The following table presents the supplemental balance sheet information related to leases: Nine Months Ended, September 30, 2019 (In thousands) Maturities of lease liabilities were as follows: (In thousands) Operating Finance Year Ending December 31, Lease Lease 2019 (excluding the nine months ended September 30, 2019) $ 1,908 $ 46 2020 7,500 183 2021 7,391 183 2022 6,125 60 2023 1,389 18 Thereafter 689 6 Total undiscounted lease payments 25,002 496 Less amounts representing interest (4,997 ) (49 ) Lease Liability $ 20,005 $ 447 |
Leases expense included in occupancy, general and administrative on statement of operations | The following table presents the leases expense included in Occupancy, General and administrative on our Unaudited Condensed Consolidated Statement of Operations: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Operating lease cost $ 1,884 $ 1,785 $ 5,659 $ 5,290 Finance lease cost 46 – 90 – Total lease cost $ 1,930 $ 1,785 $ 5,749 $ 5,290 |
Cash flow information related to leases | The following table presents the supplemental cash flow information related to leases: Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: $ Operating cash flows from operating leases $ 1,901 $ 5,678 Operating cash flows from finance leases 37 73 Financing cash flows from finance leases 9 17 |
Schedule of stock option activity | Number of Shares Weighted Average Exercise Weighted Average Remaining Contractual (in thousands) Price Term Options outstanding at the beginning of period 14,421 $ 4.57 N/A Granted 1,490 3.53 N/A Exercised (483 ) 0.86 N/A Forfeited (75 ) 4.00 N/A Options outstanding at the end of period 15,353 4.58 3.59 years Options exercisable at the end of period 11,722 $ 4.87 2.94 years |
Schedule of purchases of company stock | Nine Months Ended September 30, 2019 September 30, 2018 Shares Avg. Price Shares Avg. Price Open market purchases 335,546 $ 3.95 714,898 $ 3.81 Shares redeemed upon net exercise of stock options 18,424 3.76 33,599 4.37 Other purchases 24,500 4.20 90,000 4.13 Total stock purchases 378,470 $ 3.97 838,497 $ 3.87 |
2. Finance Receivables (Tables)
2. Finance Receivables (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Schedule of financial receivables | The following table presents the components of Finance Receivables, net of unearned interest: September 30, December 31, 2019 2018 (In thousands) Finance receivables Automobile finance receivables, net of unearned interest $ 1,020,044 $ 1,518,395 Unearned acquisition fees and originations costs 2,347 3,690 Finance receivables $ 1,022,391 $ 1,522,085 |
Schedule of delinquency status of finance receivables | The following table summarizes the delinquency status of finance receivables as of September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 (In thousands) Delinquency Status Current $ 804,537 $ 1,262,730 31 - 60 days 124,214 157,688 61 - 90 days 65,046 66,134 91 + days 26,247 31,843 $ 1,020,044 $ 1,518,395 |
Schedule of allowance for credit losses | The following table presents a summary of the activity for the allowance for finance credit losses for the three-months and nine-month periods ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Balance at beginning of period $ 32,664 $ 94,376 $ 67,376 $ 109,187 Provision for credit losses on finance receivables 19,874 31,959 64,319 107,997 Charge-offs (46,118 ) (54,033 ) (149,038 ) (163,628 ) Recoveries 6,320 10,170 30,083 28,916 Balance at end of period $ 12,740 $ 82,472 $ 12,740 $ 82,472 |
Schedule of allowance for losses on repossessed inventory | The following table presents a summary of such repossessed inventory together with the allowance for losses in repossessed inventory that is not included in the allowance for finance credit losses: September 30, December 31, 2019 2018 (In thousands) Gross balance of repossessions in inventory $ 37,481 $ 33,462 Allowance for losses on repossessed inventory (27,851 ) (24,564 ) Net repossessed inventory included in other assets $ 9,630 $ 8,898 |
3. Securitization Trust Debt (T
3. Securitization Trust Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Securitization Trust Debt | |
Schedule of securitization trust debt | The debt issued in these transactions is shown on our Unaudited Condensed Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table: Final Receivables Pledged at September 30, Initial Outstanding Principal at September 30, Outstanding Principal at December 31, Weighted Series Date (1) 2019 (2) Principal 2019 2018 2019 (Dollars in thousands) CPS 2014-A June 2021 – 180,000 – 15,328 – CPS 2014-B September 2021 – 202,500 – 24,051 – CPS 2014-C December 2021 24,989 273,000 23,997 40,896 5.04% CPS 2014-D March 2022 28,979 267,500 28,550 46,489 5.33% CPS 2015-A June 2022 34,107 245,000 32,069 52,448 5.09% CPS 2015-B September 2022 41,879 250,000 42,412 64,591 4.97% CPS 2015-C December 2022 61,129 300,000 61,648 90,639 5.59% CPS 2016-A March 2023 80,790 329,460 81,833 119,444 5.82% CPS 2016-B June 2023 96,470 332,690 94,181 135,688 6.13% CPS 2016-C September 2023 96,780 318,500 94,589 136,114 6.06% CPS 2016-D April 2024 75,637 206,325 74,176 104,645 4.51% CPS 2017-A April 2024 83,017 206,320 80,887 113,527 4.61% CPS 2017-B December 2023 100,865 225,170 87,633 127,726 3.96% CPS 2017-C September 2024 102,834 224,825 91,654 131,845 3.88% CPS 2017-D June 2024 104,368 196,300 95,003 132,919 3.55% CPS 2018-A March 2025 112,179 190,000 103,008 142,643 3.50% CPS 2018-B December 2024 131,373 201,823 124,822 167,809 3.87% CPS 2018-C September 2025 157,848 230,275 148,605 204,418 3.94% CPS 2018-D June 2025 183,774 233,730 169,869 224,189 3.95% CPS 2019-A March 2026 222,685 254,400 206,977 – 3.87% CPS 2019-B June 2026 209,982 228,275 202,163 – 3.52% CPS 2019-C December 2026 237,068 243,513 234,315 – 2.98% $ 2,186,753 $ 5,339,606 $ 2,078,391 $ 2,075,409 (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 $214.6 million in 2019, $743.3 million in 2020, $523.0 million in 2021, $312.6 million in 2022, $216.5 million in 2023, $43.6 million in 2024, $13.0 million in 2025. (2) Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet. |
4. Debt (Tables)
4. Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of debt outstanding | The terms and amounts of our other debt outstanding at September 30, 2019 and December 31, 2018 are summarized below: Amount Outstanding at September 30, December 31, 2019 2018 (In thousands) Description Interest Rate Maturity Warehouse lines of credit 5.50% over one month Libor (Minimum 6.50%) February 2021 $ 35,264 $ 38,198 3.00% over one month Libor (Minimum 3.75%) September 2020 96,154 99,885 6.75% over a commercial paper rate (Minimum 7.75%) November 2019 27,578 – Residual interest financing 8.60% January 2026 40,000 40,000 Subordinated renewable notes Weighted average rate of 9.22% and 8.53% at September 30, 2019 and December 31, 2018, respectively Weighted average maturity of December 2021 and January 2021 at September 30, 2019 and December 31, 2018, respectively 15,529 17,290 $ 214,525 $ 195,373 |
5. Interest Income and Intere_2
5. Interest Income and Interest Expense (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Banking and Thrift [Abstract] | |
Schedule of interest income | The following table presents the components of interest income: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Interest on finance receivables $ 49,912 $ 79,573 $ 167,862 $ 264,545 Interest on finance receivables at fair value 32,903 13,482 83,696 25,822 Other interest income 713 562 2,264 1,168 Interest income $ 83,528 $ 93,617 $ 253,822 $ 291,535 |
Schedule of interest expense | The following table presents the components of interest expense: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Securitization trust debt $ 24,208 $ 22,678 $ 72,662 $ 66,762 Warehouse lines of credit 2,407 1,827 6,387 5,850 Residual interest financing 956 936 2,867 1,387 Subordinated renewable notes 369 367 1,017 1,058 Interest expense $ 27,940 $ 25,808 $ 82,933 $ 75,057 |
6. Earnings Per Share (Tables)
6. Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings per share: | |
Schedule of computation of basic and diluted earnings per share | The following table reconciles the number of shares used in the computations of basic and diluted earnings per share for the three-months and nine-month periods ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Weighted average number of common shares outstanding during the period used to compute basic earnings per share 22,526 22,636 22,378 21,800 Incremental common shares attributable to exercise of outstanding options and warrants 1,540 2,099 1,724 3,378 Weighted average number of common shares used to compute diluted earnings per share 24,066 24,735 24,102 25,178 |
9. Fair Value Measurements (Tab
9. Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of reconciliation of the finance receivables measured at fair value on a recurring basis | The table below presents a reconciliation of the finance receivables measured at fair value on a recurring basis using significant unobservable inputs: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Balance at beginning of period $ 1,158,365 $ 412,895 $ 821,066 $ – Finance receivables at fair value acquired during period 261,929 229,030 756,555 659,641 Payments received on finance receivables at fair value (83,384 ) (18,851 ) (200,889 ) (31,824 ) Net interest income accretion on fair value receivables (24,309 ) (8,267 ) (64,131 ) (13,010 ) Mark to fair value 604 – 604 – Balance at end of period $ 1,313,205 $ 614,807 $ 1,313,205 $ 614,807 |
Schedule of finance receivables to their contractual balances | The table below compares the fair values of these finance receivables to their contractual balances for the periods shown: September 30, 2019 December 31, 2018 Contractual Fair Contractual Fair Balance Value Balance Value (In thousands) Finance receivables measured at fair value $ 1,356,157 $ 1,313,205 $ 829,039 $ 821,066 |
Schedule of level 3 fair value measurements | The following table provides certain qualitative information about our level 3 fair value measurements: Financial Instrument Fair Values as of Inputs as of September 30, December 31, September 30, December 31, 2019 2018 Unobservable Inputs 2019 2018 (In thousands) Assets: Finance receivables measured at fair value $ 1,313,205 $ 821,066 Discount rate Cumulative net losses 8.9% - 11.1% 15.0% - 16.1% 8.9% - 9.9% 15.0% - 16.0% |
Schedule of delinquency status of finance receivables measured at fair value | The following table summarizes the delinquency status of these finance receivables measured at fair value as of September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 (In thousands) Delinquency Status Current $ 1,242,569 $ 790,727 31 - 60 days 70,802 26,285 61 - 90 days 29,557 8,350 91 + days 13,229 3,677 $ 1,356,157 $ 829,039 |
Schedule of estimated fair values of financial assets and liabilities | The estimated fair values of financial assets and liabilities at September 30, 2019 and December 31, 2018, were as follows: As of September 30, 2019 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 8,799 $ 8,799 $ – $ – $ 8,799 Restricted cash and equivalents 128,556 128,556 – – 128,556 Finance receivables, net 1,009,651 – – 964,540 964,540 Accrued interest receivable 12,729 – – 12,729 12,729 Liabilities: Warehouse lines of credit $ 157,761 $ – $ – $ 157,761 $ 157,761 Accrued interest payable 5,257 – – 5,257 5,257 Residual interest financing 39,385 – – 39,385 39,385 Securitization trust debt 2,066,458 – – 2,095,487 2,095,487 Subordinated renewable notes 15,529 – – 15,529 15,529 As of December 31, 2018 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 12,787 $ 12,787 $ – $ – $ 12,787 Restricted cash and equivalents 117,323 117,323 – – 117,323 Finance receivables, net 1,454,709 – – 1,434,631 1,434,631 Accrued interest receivable 31,969 – – 31,969 31,969 Liabilities: Warehouse lines of credit $ 136,847 $ – $ – $ 136,847 $ 136,847 Accrued interest payable 4,819 – – 4,819 4,819 Residual interest financing 39,106 – – 39,106 39,106 Securitization trust debt 2,063,627 – – 2,051,920 2,051,920 Subordinated renewable notes 17,290 – – 17,290 17,290 |
1. Summary of Significant Acc_4
1. Summary of Significant Accounting Policies (Details - Other Income) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other income for the period | $ 1,994 | $ 2,014 | $ 6,255 | $ 7,022 |
Direct Mail Revenues [Member] | ||||
Other income for the period | 1,121 | 1,328 | 3,508 | 4,833 |
Convenience Fee Revenue [Member] | ||||
Other income for the period | 600 | 360 | 1,870 | 1,200 |
Recoveries on previously charged-off contracts [Member] | ||||
Other income for the period | 30 | 44 | 132 | 198 |
Sales Tax Refunds [Member] | ||||
Other income for the period | 200 | 220 | 631 | 658 |
Other Income [Member] | ||||
Other income for the period | $ 43 | $ 62 | $ 114 | $ 133 |
1. Summary of Significant Acc_5
1. Summary of Significant Accounting Policies (Details - Operating leases) $ in Thousands | Sep. 30, 2019USD ($) |
Operating Leases | |
Operating lease right-of-use assets | $ 23,555 |
Less: Accumulated amortization right-of-use assets | (4,986) |
Operating lease right-of-use assets, net | 18,569 |
Operating lease liabilities | $ (20,005) |
1. Summary of Significant Acc_6
1. Summary of Significant Accounting Policies (Details - Finance Leases) $ in Thousands | Sep. 30, 2019USD ($) |
Finance Leases | |
Property and equipment, at cost | $ 545 |
Less: Accumulated depreciation | (84) |
Property and equipment, net | 461 |
Finance lease liabilities | $ (447) |
1. Summary of Significant Acc_7
1. Summary of Significant Accounting Policies (Details - Maturities of lease liabilities) $ in Thousands | Sep. 30, 2019USD ($) |
Maturities of Operating lease liabilities | |
2019 (excluding the nine months ended September 30, 2019) | $ 1,908 |
2020 | 7,500 |
2021 | 7,391 |
2022 | 6,125 |
2023 | 1,389 |
Thereafter | 689 |
Total undiscounted lease payments | 25,002 |
Less amounts representing interest | (4,997) |
Lease Liability | 20,005 |
Maturities of Finance lease liabilities | |
2019 (excluding the nine months ended September 30, 2019) | 46 |
2020 | 183 |
2021 | 183 |
2022 | 60 |
2023 | 18 |
Thereafter | 6 |
Total undiscounted lease payments | 496 |
Less amounts representing interest | (49) |
Lease Liability | $ 447 |
1. Summary of Significant Acc_8
1. Summary of Significant Accounting Policies (Details - Lease - Statement of Operations) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Operating lease cost | $ 1,884 | $ 1,785 | $ 5,659 | $ 5,290 |
Finance lease cost | 46 | 0 | 90 | 0 |
Total lease cost | $ 1,930 | $ 1,785 | $ 5,749 | $ 5,290 |
1. Summary of Significant Acc_9
1. Summary of Significant Accounting Policies (Details - Lease - Cash flow) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 1,901 | $ 5,678 |
Operating cash flows from finance leases | 37 | 73 |
Financing cash flows from finance leases | $ 9 | $ 17 |
1. Summary of Significant Ac_10
1. Summary of Significant Accounting Policies (Details - Options outstanding) - $ / shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Number of Shares | ||
Outstanding options, beginning balance | 14,421 | |
Granted | 1,490 | |
Exercised | (483) | (315) |
Forfeited | (75) | |
Outstanding options, ending balance | 15,353 | |
Options exercisable at the end of period | 11,722 | |
Weighted Average Exercise Price | ||
Outstanding options, beginning balance | $ 4.57 | |
Granted | 3.53 | |
Exercised | 0.86 | |
Forfeited | 4 | |
Outstanding options, ending balance | 4.58 | |
Options exercisable at the end of period | $ 4.87 | |
Weighted Average Remaining Contractual Term | ||
Weighted average remaining contractual term options outstanding | 3 years 7 months 2 days | |
Weighted average remaining contractual term options exercisable | 2 years 11 months 8 days |
1. Summary of Significant Ac_11
1. Summary of Significant Accounting Policies (Details - Stock purchases) - Common Stock - $ / shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Total stock purchases | 378,470 | 838,497 |
Average price for total stock purchases | $ 3.97 | $ 3.87 |
Open Market Purchases [Member] | ||
Total stock purchases | 335,546 | 714,898 |
Average price for total stock purchases | $ 3.95 | $ 3.81 |
Shares redeemed upon net exercise of stock options | ||
Total stock purchases | 18,424 | 33,599 |
Average price for total stock purchases | $ 3.76 | $ 4.37 |
Other Purchases [Member] | ||
Total stock purchases | 24,500 | 90,000 |
Average price for total stock purchases | $ 4.20 | $ 4.13 |
1. Summary of Significant Ac_12
1. Summary of Significant Accounting Policies (Details Narrative) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Mark to market value of pool of receivables | $ 604 | $ 604 | ||
Stock based compensation costs | 377 | $ 663 | 1,496 | $ 2,816 |
Unrecognized stock-based compensation costs | 2,100 | $ 2,100 | ||
Unrecognized stock-based compensation costs amortization period | 2 years 3 months 19 days | |||
Aggregate intrinsic value outstanding | 5,800 | $ 5,800 | ||
Aggregate intrinsic value exercisable | $ 5,500 | $ 5,500 | ||
Options Exercised | 483 | 315 | ||
Total intrinsic value of options exercised | $ 1,400 | $ 869 | ||
Shares available for future grants | 1,458 | 1,458 | ||
Weighted Average Discount Rate Operating lease | 5.00% | 5.00% | ||
Weighted Average Discount Rate Finance lease | 6.70% | 6.70% |
2. Finance Receivables (Details
2. Finance Receivables (Details - Finance receivables) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Automobile finance receivables, net of unearned interest | $ 1,020,044 | $ 1,518,395 |
Unearned acquisition fees and originations costs | 2,347 | 3,690 |
Finance Receivables | $ 1,022,391 | $ 1,522,085 |
2. Finance Receivables (Detai_2
2. Finance Receivables (Details - Delinquency status) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current | $ 804,537 | $ 1,262,730 |
Finance receivables | 1,020,044 | 1,518,395 |
Financing Receivables, 31 - 60 Days Past Due [Member] | ||
Finance receivables | 124,214 | 157,688 |
Financing Receivables, 61 - 90 Days Past Due [Member] | ||
Finance receivables | 65,046 | 66,134 |
Financing Receivables, 91+ Days Past Due [Member] | ||
Finance receivables | $ 26,247 | $ 31,843 |
2. Finance Receivables (Detai_3
2. Finance Receivables (Details - Finance credit losses) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Receivables [Abstract] | ||||
Allowance for credit losses, beginning balance | $ 32,664 | $ 94,376 | $ 67,376 | $ 109,187 |
Provision for credit losses | 19,874 | 31,959 | 64,319 | 107,997 |
Charge-offs | (46,118) | (54,033) | (149,038) | (163,628) |
Recoveries | 6,320 | 10,170 | 30,083 | 28,916 |
Allowance for credit losses, ending balance | $ 12,740 | $ 82,472 | $ 12,740 | $ 82,472 |
2. Finance Receivables (Detai_4
2. Finance Receivables (Details - Repossessions) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Receivables [Abstract] | ||
Gross balance of repossessions in inventory | $ 37,481 | $ 33,462 |
Allowance for losses on repossessed inventory | (27,851) | (24,564) |
Net repossessed inventory included in other assets | $ 9,630 | $ 8,898 |
2. Finance Receivables (Detai_5
2. Finance Receivables (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Finance receivables | $ 26,200 | $ 31,800 |
3. Securitization Trust Debt (D
3. Securitization Trust Debt (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | ||
"Securitization trust debt," and components of debt | |||
Receivables Pledged at end of period | [1] | $ 2,186,753 | |
Initial Principal | 5,339,606 | ||
Outstanding Principal | $ 2,078,391 | $ 2,075,409 | |
CPS 2014-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2021 | |
Receivables Pledged at end of period | [1] | $ 0 | |
Initial Principal | 180,000 | ||
Outstanding Principal | $ 0 | 15,328 | |
Weighted Average Contractual Interest Rate | 0.00% | ||
CPS 2014-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2021 | |
Receivables Pledged at end of period | [1] | $ 0 | |
Initial Principal | 202,500 | ||
Outstanding Principal | $ 0 | 24,051 | |
Weighted Average Contractual Interest Rate | 0.00% | ||
CPS 2014-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2021 | |
Receivables Pledged at end of period | [1] | $ 24,989 | |
Initial Principal | 273,000 | ||
Outstanding Principal | $ 23,997 | 40,896 | |
Weighted Average Contractual Interest Rate | 5.04% | ||
CPS 2014-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2022 | |
Receivables Pledged at end of period | [1] | $ 28,979 | |
Initial Principal | 267,500 | ||
Outstanding Principal | $ 28,550 | 46,489 | |
Weighted Average Contractual Interest Rate | 5.33% | ||
CPS 2015-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2022 | |
Receivables Pledged at end of period | [1] | $ 34,107 | |
Initial Principal | 245,000 | ||
Outstanding Principal | $ 32,069 | 52,448 | |
Weighted Average Contractual Interest Rate | 5.09% | ||
CPS 2015-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2022 | |
Receivables Pledged at end of period | [1] | $ 41,879 | |
Initial Principal | 250,000 | ||
Outstanding Principal | $ 42,412 | 64,591 | |
Weighted Average Contractual Interest Rate | 4.97% | ||
CPS 2015-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2022 | |
Receivables Pledged at end of period | [1] | $ 61,129 | |
Initial Principal | 300,000 | ||
Outstanding Principal | $ 61,648 | 90,639 | |
Weighted Average Contractual Interest Rate | 5.59% | ||
CPS 2016-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2023 | |
Receivables Pledged at end of period | [1] | $ 80,790 | |
Initial Principal | 329,460 | ||
Outstanding Principal | $ 81,833 | 119,444 | |
Weighted Average Contractual Interest Rate | 5.82% | ||
CPS 2016-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2023 | |
Receivables Pledged at end of period | [1] | $ 96,470 | |
Initial Principal | 332,690 | ||
Outstanding Principal | $ 94,181 | 135,688 | |
Weighted Average Contractual Interest Rate | 6.13% | ||
CPS 2016-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2023 | |
Receivables Pledged at end of period | [1] | $ 96,780 | |
Initial Principal | 318,500 | ||
Outstanding Principal | $ 94,589 | 136,114 | |
Weighted Average Contractual Interest Rate | 6.06% | ||
CPS 2016-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | April 2024 | |
Receivables Pledged at end of period | [1] | $ 75,637 | |
Initial Principal | 206,325 | ||
Outstanding Principal | $ 74,176 | 104,645 | |
Weighted Average Contractual Interest Rate | 4.51% | ||
CPS 2017-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | April 2024 | |
Receivables Pledged at end of period | [1] | $ 83,017 | |
Initial Principal | 206,320 | ||
Outstanding Principal | $ 80,887 | 113,527 | |
Weighted Average Contractual Interest Rate | 4.61% | ||
CPS 2017-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2023 | |
Receivables Pledged at end of period | [1] | $ 100,865 | |
Initial Principal | 225,170 | ||
Outstanding Principal | $ 87,633 | 127,726 | |
Weighted Average Contractual Interest Rate | 3.96% | ||
CPS 2017-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2024 | |
Receivables Pledged at end of period | [1] | $ 102,834 | |
Initial Principal | 224,825 | ||
Outstanding Principal | $ 91,654 | 131,845 | |
Weighted Average Contractual Interest Rate | 3.88% | ||
CPS 2017-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2024 | |
Receivables Pledged at end of period | [1] | $ 104,368 | |
Initial Principal | 196,300 | ||
Outstanding Principal | $ 95,003 | 132,919 | |
Weighted Average Contractual Interest Rate | 3.55% | ||
CPS 2018-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2025 | |
Receivables Pledged at end of period | [1] | $ 112,179 | |
Initial Principal | 190,000 | ||
Outstanding Principal | $ 103,008 | 142,643 | |
Weighted Average Contractual Interest Rate | 3.50% | ||
CPS 2018-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2024 | |
Receivables Pledged at end of period | [1] | $ 131,373 | |
Initial Principal | 201,823 | ||
Outstanding Principal | $ 124,822 | 167,809 | |
Weighted Average Contractual Interest Rate | 3.87% | ||
CPS 2018-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | September 2025 | |
Receivables Pledged at end of period | [1] | $ 157,848 | |
Initial Principal | 230,275 | ||
Outstanding Principal | $ 148,605 | 204,418 | |
Weighted Average Contractual Interest Rate | 3.94% | ||
CPS 2018-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2025 | |
Receivables Pledged at end of period | [1] | $ 183,774 | |
Initial Principal | 233,730 | ||
Outstanding Principal | $ 169,869 | 224,189 | |
Weighted Average Contractual Interest Rate | 3.95% | ||
CPS 2019-A [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2026 | |
Receivables Pledged at end of period | [1] | $ 222,685 | |
Initial Principal | 254,400 | ||
Outstanding Principal | $ 206,977 | 0 | |
Weighted Average Contractual Interest Rate | 3.87% | ||
CPS 2019-B [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | June 2026 | |
Receivables Pledged at end of period | [1] | $ 209,982 | |
Initial Principal | 228,275 | ||
Outstanding Principal | $ 202,163 | 0 | |
Weighted Average Contractual Interest Rate | 3.52% | ||
CPS 2019-C [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | December 2026 | |
Receivables Pledged at end of period | [1] | $ 237,068 | |
Initial Principal | 243,513 | ||
Outstanding Principal | $ 234,315 | $ 0 | |
Weighted Average Contractual Interest Rate | 2.98% | ||
[1] | Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet. | ||
[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 $214.6 million in 2019, $743.3 million in 2020, $523.0 million in 2021, $312.6 million in 2022, $216.5 million in 2023, $43.6 million in 2024, $13.0 million in 2025. |
3. Securitization Trust Debt _2
3. Securitization Trust Debt (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Expected finance receivable payments 2019 | $ 214,600 | |
Expected finance receivable payments 2020 | 743,300 | |
Expected finance receivable payments 2021 | 523,000 | |
Expected finance receivable payments 2022 | 312,600 | |
Expected finance receivable payments 2023 | 216,500 | |
Expected finance receivable payments 2024 | 43,600 | |
Expected finance receivable payments 2025 | 13,000 | |
Restricted cash | 128,600 | |
Securitization Trust Debt [Member] | ||
Debt issuance costs | $ 11,900 | $ 11,800 |
4. Debt (Details - Debt outstan
4. Debt (Details - Debt outstanding) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Warehouse lines of credit | $ 157,761 | $ 136,847 |
Residual interest financing | 39,385 | 39,106 |
Subordinated renewable notes | 15,529 | 17,290 |
Total debt outstanding | 214,525 | 195,373 |
Warehouse lines of credit [Member] | ||
Warehouse lines of credit | $ 35,264 | 38,198 |
Interest rate | 5.50% over one month Libor (Minimum 6.50%) | |
Maturity date | February 2021 | |
Warehouse lines of credit (2) [Member] | ||
Warehouse lines of credit | $ 96,154 | 99,885 |
Interest rate | 3.00% over one month Libor (Minimum 3.75%) | |
Maturity date | September 2020 | |
Warehouse lines of credit (3) [Member] | ||
Warehouse lines of credit | $ 27,578 | 0 |
Interest rate | 6.75% over a commercial paper rate (Minimum 7.75%) | |
Maturity date | November 2019 | |
Residual interest financing [Member] | ||
Residual interest financing | $ 40,000 | 40,000 |
Interest rate | 8.60% | |
Maturity date | January 2026 | |
Subordinated renewable notes [Member] | ||
Subordinated renewable notes | $ 15,529 | $ 17,290 |
Interest rate | Weighted average rate of 9.22% and 8.53% at September 30, 2019 and December 31, 2018, respectively | |
Maturity date | Weighted average maturity of December 2021 and January 2021 at September 30, 2019 and December 31, 2018, respectively |
4. Debt (Details Narrative)
4. Debt (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Residual interest financing [Member] | ||
Unamortized debt issuance costs | $ 615 | $ 894 |
Warehouse Lines of Credit [Member] | ||
Unamortized debt issuance costs | $ 1,200 | $ 1,200 |
5. Interest Income and Intere_3
5. Interest Income and Interest Expense (Details - Interest income) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Components of interest income | ||||
Interest on finance receivables | $ 49,912 | $ 79,573 | $ 167,862 | $ 264,545 |
Interest on finance receivables at fair value | 32,903 | 13,482 | 83,696 | 25,822 |
Other interest income | 713 | 562 | 2,264 | 1,168 |
Interest income | $ 83,528 | $ 93,617 | $ 253,822 | $ 291,535 |
5. Interest Income and Intere_4
5. Interest Income and Interest Expense (Details - Interest expense) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Total interest expense | $ 27,940 | $ 25,808 | $ 82,933 | $ 75,057 |
Securitization Trust Debt [Member] | ||||
Total interest expense | 24,208 | 22,678 | 72,662 | 66,762 |
Warehouse Lines of Credit [Member] | ||||
Total interest expense | 2,407 | 1,827 | 6,387 | 5,850 |
Residual interest financing [Member] | ||||
Total interest expense | 956 | 936 | 2,867 | 1,387 |
Subordinated renewable notes [Member] | ||||
Total interest expense | $ 369 | $ 367 | $ 1,017 | $ 1,058 |
6. Earnings Per Share (Details)
6. Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings per share: | ||||
Weighted average number of common shares outstanding during the period used to compute basic earnings per share | 22,526 | 22,636 | 22,378 | 21,800 |
Incremental common shares attibutable to exercise of outstanding options and warrants | 1,540 | 2,099 | 1,724 | 3,378 |
Weighted average number of common shares used to compute diluted earnings per share | 24,066 | 24,735 | 24,102 | 25,178 |
6. Earnings Per Share (Details
6. Earnings Per Share (Details Narrative) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings per share: | ||||
Antidilutive common stock equivalents | 10,600 | 11,000 | 10,600 | 10,100 |
7. Income Taxes (Details Narrat
7. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | ||
Deferred tax asset | 16,100 | 16,100 | |||
U.S. federal deferred tax assets | 11,500 | 11,500 | |||
State deferred tax assets | 4,600 | 4,600 | |||
Income tax expense | $ 991 | $ 1,508 | $ 2,898 | $ 4,409 | |
Effective income tax rate | 35.00% | 32.00% |
9. Fair Value Measurements (Det
9. Fair Value Measurements (Details - Reconciliation of Finance Receivables) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | ||||
Finance receivables, beginning balance | $ 1,158,365 | $ 412,895 | $ 821,066 | $ 0 |
Finance receivables at fair value acquired during period | 261,929 | 229,030 | 756,555 | 659,641 |
Payments received on finance receivables at fair value | (83,384) | (18,851) | (200,889) | (31,824) |
Net interest income accretion on fair value receivables | (24,309) | (8,267) | (64,131) | (13,010) |
Mark to fair value | 604 | 0 | 604 | 0 |
Finance receivables, ending balance | $ 1,313,205 | $ 614,807 | $ 1,313,205 | $ 614,807 |
9. Fair Value Measurements (D_2
9. Fair Value Measurements (Details - Finance Receivables to Their Contractual Balances) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Finance receivables measured at fair value | $ 1,313,205 | $ 1,158,365 | $ 821,066 | $ 614,807 | $ 412,895 | $ 0 |
Contractual Balance [Member] | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Finance receivables measured at fair value | $ 1,356,157 | $ 829,039 |
9. Fair Value Measurements (D_3
9. Fair Value Measurements (Details - Level 3 Fair Value Measurements) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Finance receivables measured at fair value | $ 1,313,205 | $ 821,066 | $ 1,158,365 | $ 614,807 | $ 412,895 | $ 0 |
Fair Value [Member] | Level 3 [Member] | ||||||
Finance receivables measured at fair value | $ 1,313,205 | $ 821,066 | ||||
Fair Value [Member] | Level 3 [Member] | Discount Rate [Member] | ||||||
Unobservable Inputs | 8.9% - 11.1% | 8.9% - 9.9% | ||||
Fair Value [Member] | Level 3 [Member] | Cumulative Net Losses [Member] | ||||||
Unobservable Inputs | 15.0% - 16.1% | 15.0% - 16.0% |
9. Fair Value Measurements (D_4
9. Fair Value Measurements (Details - Delinquency status) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Finance receivables measured at fair value current | $ 1,242,569 | $ 790,727 |
Finance receivables measured at fair value | 1,356,157 | 829,039 |
Financing Receivables, 31 - 60 Days Past Due [Member] | ||
Finance receivables measured at fair value | 70,802 | 26,285 |
Financing Receivables, 61 - 90 Days Past Due [Member] | ||
Finance receivables measured at fair value | 29,557 | 8,350 |
Financing Receivables, 91+ Days Past Due [Member] | ||
Finance receivables measured at fair value | $ 13,229 | $ 3,677 |
9. Fair Value Measurements (D_5
9. Fair Value Measurements (Details - Fair values) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash and cash equivalents | $ 8,799 | $ 12,787 |
Restricted cash and equivalents | 128,556 | 117,323 |
Finance receivables, net | 964,540 | 1,434,631 |
Accrued interest receivable | 12,729 | 31,969 |
Liabilities: | ||
Warehouse lines of credit | 157,761 | 136,847 |
Accrued interest payable | 5,257 | 4,819 |
Residual interest financing | 39,385 | 39,106 |
Securitization trust debt | 2,095,487 | 2,051,920 |
Subordinated renewable notes | 15,529 | 17,290 |
Level 1 [Member] | ||
Assets: | ||
Cash and cash equivalents | 8,799 | 12,787 |
Restricted cash and equivalents | 128,556 | 117,323 |
Finance receivables, net | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Liabilities: | ||
Warehouse lines of credit | 0 | 0 |
Accrued interest payable | 0 | 0 |
Residual interest financing | 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 |
Residual interest financing | 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 | 964,540 | 1,434,631 |
Accrued interest receivable | 12,729 | 31,969 |
Liabilities: | ||
Warehouse lines of credit | 157,761 | 136,847 |
Accrued interest payable | 5,257 | 4,819 |
Residual interest financing | 39,385 | 39,106 |
Securitization trust debt | 2,095,487 | 2,051,920 |
Subordinated renewable notes | 15,529 | 17,290 |
Carrying Value [Member] | ||
Assets: | ||
Cash and cash equivalents | 8,799 | 12,787 |
Restricted cash and equivalents | 128,556 | 117,323 |
Finance receivables, net | 1,009,651 | 1,454,709 |
Accrued interest receivable | 12,729 | 31,969 |
Liabilities: | ||
Warehouse lines of credit | 157,761 | 136,847 |
Accrued interest payable | 5,257 | 4,819 |
Residual interest financing | 39,385 | 39,106 |
Securitization trust debt | 2,066,458 | 2,063,627 |
Subordinated renewable notes | $ 15,529 | $ 17,290 |
9. Fair Value Measurements (D_6
9. Fair Value Measurements (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | ||
Finance receivables related to reposessed vehicles in inventory | $ 37,481 | $ 33,462 |
Valuation adjustment, loss allowance | $ 27,851 | 24,564 |
Recovery rate | 26.00% | |
Estimated fair value and carrying amount of repossed inventory | $ 9,630 | $ 8,898 |