Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 10, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | CONSUMER PORTFOLIO SERVICES INC | ||
Entity Central Index Key | 0000889609 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 1-14116 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
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 Public Float | $ 61,511,026 | ||
Entity Common Stock, Shares Outstanding | 22,558,918 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 5,295 | $ 12,787 |
Restricted cash and equivalents | 135,537 | 117,323 |
Finance receivables | 897,530 | 1,522,085 |
Less: Allowance for finance credit losses | (11,640) | (67,376) |
Finance receivables, net | 885,890 | 1,454,709 |
Finance receivables measured at fair value | 1,444,038 | 821,066 |
Furniture and equipment, net | 1,512 | 1,837 |
Deferred tax assets, net | 15,480 | 19,188 |
Accrued interest receivable | 11,645 | 31,969 |
Other assets | 39,852 | 26,801 |
Total | 2,539,249 | 2,485,680 |
Liabilities | ||
Accounts payable and accrued expenses | 47,077 | 31,692 |
Warehouse lines of credit | 134,791 | 136,847 |
Residual interest financing | 39,478 | 39,106 |
Securitization trust debt | 2,097,728 | 2,063,627 |
Subordinated renewable notes | 17,534 | 17,290 |
Total | 2,336,608 | 2,288,562 |
COMMITMENTS AND CONTINGENCIES | 0 | 0 |
Shareholders' Equity | ||
Common stock, no par value; authorized 75,000,000 shares; 22,530,918 and 22,421,688 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively | 71,257 | 70,273 |
Retained earnings | 139,805 | 134,399 |
Accumulated other comprehensive loss | (8,421) | (7,554) |
Total stockholders' equity | 202,641 | 197,118 |
Total liabilities and stockholders' equity | 2,539,249 | 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 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 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 |
Preferred stock, outstanding | 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 | 22,530,918 | 22,421,688 |
Common stock, outstanding | 22,530,918 | 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 |
Preferred stock, outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized | 1,870 | 1,870 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | |||
Interest income | $ 337,096 | $ 380,297 | $ 424,174 |
Other income | 8,704 | 9,478 | 10,209 |
Total revenues | 345,800 | 389,775 | 434,383 |
Expenses: | |||
Employee costs | 80,877 | 79,318 | 72,967 |
General and administrative | 33,004 | 31,037 | 26,578 |
Interest | 110,528 | 101,466 | 92,345 |
Provision for credit losses | 85,773 | 133,080 | 186,713 |
Sales | 17,893 | 17,572 | 15,613 |
Occupancy | 7,487 | 7,607 | 7,162 |
Depreciation and amortization | 1,076 | 992 | 934 |
Total operating expenses | 336,638 | 371,072 | 402,312 |
Income before income tax expense | 9,162 | 18,703 | 32,071 |
Income tax expense | 3,756 | 3,841 | 28,306 |
Net income | $ 5,406 | $ 14,862 | $ 3,765 |
Earnings per share: | |||
Basic (in dollars per share) | $ 0.24 | $ 0.68 | $ 0.17 |
Diluted (in dollars per share) | $ 0.22 | $ 0.59 | $ 0.14 |
Number of shares used in computing earnings per share: | |||
Basic (in shares) | 22,416 | 21,989 | 22,687 |
Diluted (in shares) | 24,064 | 24,988 | 27,214 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 5,406 | $ 14,862 | $ 3,765 |
Other comprehensive income (loss); change in funded status of pension plan, net of $508, $173 and $232 in tax for 2019, 2018 and 2017, respectively | (867) | (372) | (500) |
Comprehensive income | $ 4,539 | $ 14,490 | $ 3,265 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Amount of tax expense (benefit) for (increase) decrease in value of benefit obligation | $ 508 | $ 173 | $ 232 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at beginning at Dec. 31, 2016 | $ 77,128 | $ 115,772 | $ (6,682) | $ 186,218 |
Balance at beginning (in shares) at Dec. 31, 2016 | 23,587 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued upon exercise of options and warrants | $ 1,085 | 1,085 | ||
Common stock issued upon exercise of options and warrants (in shares) | 647 | |||
Repurchase of common stock | $ (12,346) | (12,346) | ||
Repurchase of common stock (in shares) | (2,745) | |||
Pension benefit obligation | (500) | (500) | ||
Stock-based compensation | 5,715 | 5,715 | ||
Net income | 3,765 | 3,765 | ||
Balance at end at Dec. 31, 2017 | $ 71,582 | 119,537 | (7,182) | 183,937 |
Balance at end (in shares) at Dec. 31, 2017 | 21,489 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued upon exercise of options and warrants | $ 483 | 483 | ||
Common stock issued upon exercise of options and warrants (in shares) | 2,315 | |||
Repurchase of common stock | $ (5,307) | (5,307) | ||
Repurchase of common stock (in shares) | (1,382) | |||
Pension benefit obligation | (372) | (372) | ||
Stock-based compensation | 3,515 | 3,515 | ||
Net income | 14,862 | 14,862 | ||
Balance at end at Dec. 31, 2018 | $ 70,273 | 134,399 | (7,554) | 197,118 |
Balance at end (in shares) at Dec. 31, 2018 | 22,422 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued upon exercise of options and warrants | $ 352 | 352 | ||
Common stock issued upon exercise of options and warrants (in shares) | 488 | |||
Repurchase of common stock | $ (1,440) | (1,440) | ||
Repurchase of common stock (in shares) | (379) | |||
Pension benefit obligation | (867) | (867) | ||
Stock-based compensation | 2,072 | 2,072 | ||
Net income | 5,406 | 5,406 | ||
Balance at end at Dec. 31, 2019 | $ 71,257 | $ 139,805 | $ (8,421) | $ 202,641 |
Balance at end (in shares) at Dec. 31, 2019 | 22,531 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 5,406 | $ 14,862 | $ 3,765 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Accretion of deferred acquisition fees and origination costs | 1,757 | 2,655 | 1,305 |
Net interest income accretion on fair value receivables | 90,383 | 26,162 | 0 |
Depreciation and amortization | 1,076 | 992 | 934 |
Amortization of deferred financing costs | 8,281 | 8,453 | 8,738 |
Mark to fair value of finance receivables measured at fair value | (2,109) | 0 | 0 |
Provision for credit losses | 85,773 | 133,080 | 186,713 |
Stock-based compensation expense | 2,072 | 3,515 | 5,715 |
Changes in assets and liabilities: | |||
Accrued interest receivable | 20,324 | 14,784 | (10,520) |
Other assets | 7,464 | (4,161) | 5,361 |
Deferred tax assets, net | 3,708 | 13,258 | 10,399 |
Accounts payable and accrued expenses | (7,351) | 2,605 | 3,238 |
Net cash provided by operating activities | 216,784 | 216,205 | 215,648 |
Cash flows from investing activities: | |||
Originations of finance receivables held for investment | 0 | 0 | (859,069) |
Payments received on finance receivables held for investment | 481,289 | 605,353 | 647,619 |
Purchases of finance receivables measured at fair value | (1,004,194) | (914,949) | 0 |
Payments on receivables portfolio at fair value | 292,948 | 67,721 | 4 |
Change in repossessions held in inventory | 1,354 | 757 | 1,490 |
Purchase of furniture and equipment | (751) | (1,077) | (669) |
Net cash used in investing activities | (229,354) | (242,195) | (210,625) |
Cash flows from financing activities: | |||
Proceeds from issuance of securitization trust debt | 1,000,501 | 855,828 | 852,615 |
Proceeds from issuance of subordinated renewable notes | 5,764 | 3,175 | 4,083 |
Payments on subordinated renewable notes | (5,520) | (2,451) | (2,466) |
Net proceeds from (repayments of) warehouse lines of credit | (1,300) | 23,809 | 9,309 |
Net advances of residual interest financing debt | 0 | 40,000 | 0 |
Repayment of securitization trust debt | (966,144) | (876,094) | (851,193) |
Payment of financing costs | (8,921) | (8,039) | (8,104) |
Repurchase of common stock | (1,440) | (5,307) | (12,346) |
Exercise of options and warrants | 352 | 483 | 1,085 |
Net cash provided by (used in) financing activities | 23,292 | 31,404 | (7,017) |
Increase (decrease) in cash and cash equivalents | 10,722 | 5,414 | (1,994) |
Cash and cash equivalents at beginning of year | 130,110 | 124,696 | 126,690 |
Cash and cash equivalents at end of year | 140,832 | 130,110 | 124,696 |
Cash paid (received) during the period for: | |||
Interest | 101,812 | 92,405 | 83,110 |
Income taxes | (5,156) | 417 | 9,319 |
Non-cash financing activities: | |||
Right-of-use asset, net | (21,869) | 0 | 0 |
Lease liability | 23,327 | 0 | 0 |
Deferred office rent | $ (1,458) | $ 0 | $ 0 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (1) Summary of Significant Accounting Policies Description of Business Consumer Portfolio Services, Inc. ("CPS") was incorporated in California on March 8, 1991. CPS and its subsidiaries (collectively, the "Company") specialize in purchasing and servicing retail automobile installment sale contracts ("Contracts") originated by licensed motor vehicle dealers ("Dealers") located throughout the United States. Dealers located in California, Ohio, Indiana, North Carolina, Florida and represented 12.6%, 10.8%, 6.3%, 5.4% and 4.9%, respectively, of contracts purchased during 2019 compared with 8.7%, 8.8%, 5.2%, 6.2% and 6.0% respectively in 2018. No other state had a concentration in excess of 4.9% in 2019. We specialize in contracts with vehicle purchasers who generally would not be expected to qualify for traditional financing provided by commercial banks or automobile manufacturers’ captive finance companies. We are subject to various regulations and laws as they relate to the extension of credit in consumer credit transactions. Failure to comply with such laws and regulations could have a material adverse effect on the Company. Principles of Consolidation The Consolidated Financial Statements include the accounts of Consumer Portfolio Services, Inc. and its wholly-owned subsidiaries, certain of which are special purpose subsidiaries ("SPS"), formed to accommodate the structures under which we purchase and securitize our contracts. The Consolidated Financial Statements also include the accounts of CPS Leasing, Inc., an 80% owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of cash on hand and due from banks and money market accounts. Substantially all of our cash is deposited at three financial institutions. We maintain cash due from banks in excess of the banks' insured deposit limits. We do not believe we are exposed to any significant credit risk on these deposits. As part of certain financial covenants related to debt facilities, we are required to maintain a minimum unrestricted cash balance. As of December 31, 2019, our unrestricted cash balance was $5.3 million, which exceeded the minimum amounts required by our financial covenants. Finance Receivables Finance receivables, which we have the intent and ability to hold for the foreseeable future or until maturity or payoff, are presented at cost. All finance receivable contracts are held for investment. Interest income is accrued on the unpaid principal balance. Origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Generally, payments received on finance receivables are restricted to certain securitized pools, and the related contracts cannot be resold. Finance receivables are charged off pursuant to the controlling documents of certain securitized pools, generally as described below under Charge Off Policy. Management may authorize an extension of payment terms if collection appears likely during the next calendar month. Our portfolio of finance receivables consists of small-balance homogeneous contracts that are collectively evaluated for impairment on a portfolio basis. We report delinquency on a contractual basis. Once a Contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the Contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a Contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. 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 December 31, 2019, the net present value of the forecasted cash flows for the receivables acquired in the first and second quarter of 2018 exceeded the carrying value of that pool by $2.1 million, 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. Allowance for Finance Credit Losses In order to estimate an appropriate allowance for losses likely incurred on finance receivables, we use a loss allowance methodology commonly referred to as "static pooling," which stratifies the finance receivable portfolio into separately identified pools based on their period of origination, then uses historical performance of seasoned pools to estimate future losses on current pools. Historical loss experience is adjusted as necessary for current economic conditions. We consider our portfolio of finance receivables to be relatively homogenous and consequently we analyze credit performance primarily in the aggregate rather than stratification by any particular credit quality indicator. Using analytical and formula driven techniques, we estimate an allowance for finance credit losses, which we believe is adequate for probable incurred credit losses that can be reasonably estimated in our portfolio of finance receivable contracts. For each monthly pool of contracts that we purchase, we begin establishing the allowance in the month of acquisition and increase it over the subsequent 11 months, through a provision for credit losses charged to our Consolidated Statement of Income. Net losses incurred on finance receivables are charged to the allowance. We evaluate the adequacy of the allowance by examining current delinquencies, the characteristics of the portfolio, the value of the underlying collateral and historical loss trends. As conditions change, our level of provisioning and/or allowance may change. Charge Off Policy Delinquent contracts for which the related financed vehicle has been repossessed are generally charged off at the earliest of (1) the month in which the proceeds from the sale of the financed vehicle are received, (2) the month in which 90 days have passed from the date of repossession or (3) the month in which the Contract becomes seven scheduled payments past due (see Repossessed and Other Assets below). The amount charged off is the remaining principal balance of the Contract, after the application of the net proceeds from the liquidation of the financed vehicle. With respect to delinquent contracts for which the related financed vehicle has not been repossessed, the remaining principal balance is generally charged off no later than the end of the month that the Contract becomes five scheduled payments past due. Contract Acquisition Fees and Origination Costs Upon purchase of a Contract from a Dealer, we generally either charge or advance the Dealer an acquisition fee. Dealer acquisition fees and deferred origination costs are applied to the carrying value of finance receivables and are accreted into earnings as an adjustment to the yield over the estimated life of the Contract using the interest method. However, for receivables measured at fair value, 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. Repossessed and Other Assets If a Contract obligor fails to make or keep promises for payments, or if the obligor is uncooperative or attempts to evade contact or hide the vehicle, a supervisor will review the collection activity relating to the account to determine if repossession of the vehicle is warranted. Generally, such a decision is made between the 60th and 90th day past the obligor’s payment due date, but could occur sooner or later, depending on the specific circumstances. At the time the vehicle is repossessed we stop accruing interest on the Contract, and reclassify the remaining Contract balance to the line item "Other Assets" on our Consolidated Balance Sheet at its estimated fair value less costs to sell. Included in other assets in the accompanying Consolidated Balance Sheets are repossessed vehicles pending sale of $7.5 million and $8.9 million at December 31, 2019 and 2018, respectively. Treatment of Securitizations Our term securitization structure has generally been as follows: We sell contracts we acquire to a wholly-owned SPS, which has been established for the limited purpose of buying and reselling our contracts. The SPS then transfers the same contracts to another entity, typically a statutory trust ("Trust"). The Trust issues interest-bearing asset-backed securities ("Notes"), in a principal amount equal to or less than the aggregate principal balance of the contracts. We typically sell these contracts to the Trust at face value and without recourse, except representations and warranties that we make to the Trust that are similar to those provided to us by the Dealer. One or more investors (the "Noteholders") purchase the Notes issued by the Trust; the proceeds from the sale of the Notes are then used to purchase the contracts from us. We may retain or sell subordinated Notes issued by the Trust. In addition, we have provided "Credit Enhancement" for the benefit of the Noteholders in three forms: (1) an initial cash deposit to a bank account (a "Spread Account") held by the Trust, (2) overcollateralization of the Notes, where the principal balance of the Notes issued is less than the principal balance of the contracts, and (3) in the form of subordinated Notes. The agreements governing the securitization transactions (collectively referred to as the "Securitization Agreements") require that the initial level of Credit Enhancement be supplemented by a portion of collections from the contracts until the level of Credit Enhancement reaches specified levels, which are then maintained. The specified levels are generally computed as a percentage of the principal amount remaining unpaid under the related contracts. The specified levels at which the Credit Enhancement is to be maintained will vary depending on the performance of the portfolios of contracts held by the Trusts and on other conditions. Such levels have increased and decreased from time to time based on performance of the various portfolios, and have also varied from one Trust to another. Our warehouse securitization structures are similar to the above, except that (i) the SPS that purchases the contracts pledges the contracts to secure promissory notes or loans that it issues, and (ii) no increase in the required amount of Credit Enhancement is contemplated. Upon each sale of contracts in a securitization structured as a secured financing, we retain as assets on our Consolidated Balance Sheet the securitized contracts and record as indebtedness the Notes issued in the transaction. We have the power to direct the most significant activities of the SPS. In addition, we have the obligation to absorb losses and the rights to receive benefits from the SPS, both of which could be potentially significant to the SPS. These types of securitization structures are treated as secured financings, in which the receivables remain on our Consolidated Balance Sheet, and the debt issued by the SPS is shown as a securitization trust debt on our Consolidated Balance Sheet. We receive periodic base servicing fees for the servicing and collection of the contracts. In addition, we are entitled to the cash flows from the Trusts that represent collections on the contracts in excess of the amounts required to pay principal and interest on the Notes, the base servicing fees, and certain other fees (such as trustee and custodial fees). Required principal payments on the Notes are generally defined as the payments sufficient to keep the principal balance of the Notes equal to the aggregate principal balance of the related contracts (excluding those contracts that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related Securitization Agreements require accelerated payment of principal until the principal balance of the Notes is reduced to the specified percentage. Such accelerated principal payment is said to create "overcollateralization" of the Notes. If the amount of cash required for payment of fees, interest and principal on the senior Notes exceeds the amount collected during the collection period, the shortfall is generally withdrawn from the Spread Account, if any. If the cash collected during the period exceeds the amount necessary for the above allocations plus required principal payments on the subordinated Notes, if any, and there is no shortfall in the related Spread Account or other form of Credit Enhancement, the excess is released to us. If the total Credit Enhancement amount is not at the required level, then the excess cash collected is retained in the Trust until the specified level is achieved. Cash in the Spread Accounts is restricted from our use. Cash held in the various Spread Accounts is invested in high quality, liquid investment securities, as specified in the Securitization Agreements. In all of our term securitizations we have transferred the receivables (through a subsidiary) to the securitization Trust. We report the assets and liabilities of the securitization Trust on our Consolidated Balance Sheet. The Noteholders’ and the related securitization Trusts’ recourse against us for failure of the contract obligors to make payments on a timely basis is limited, in general, to our Finance Receivables, and Spread Accounts. Servicing We consider the contractual servicing fee received on our managed portfolio held by non-consolidated subsidiaries to be equal to adequate compensation. Additionally, we consider that these fees would fairly compensate a substitute servicer, should one be required. As a result, no servicing asset or liability has been recognized. Servicing fees received on the managed portfolio held by non-consolidated subsidiaries are reported as income when earned. Servicing fees received on the managed portfolio held by consolidated subsidiaries are included in interest income when earned. Servicing costs are charged to expense as incurred. Servicing fees receivable, which are included in Other Assets in the accompanying Consolidated Balance Sheets, represent fees earned but not yet remitted to us by the trustee. Furniture and Equipment Furniture and equipment are stated at cost net of accumulated depreciation. We calculate depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Assets held under capital leases and leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related lease terms. Amortization expense on assets acquired under capital lease is included with depreciation expense on owned assets. Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Other Income The following table presents the primary components of Other Income: Year Ended December 31, 2019 2018 2017 (In thousands) Direct mail revenues $ 4,659 $ 5,829 $ 6,432 Convenience fee revenue 2,440 1,700 1,900 Recoveries on previously charged-off contracts 158 248 563 Sales tax refunds 1,239 887 866 Other 208 814 448 Other income for the period $ 8,704 $ 9,478 $ 10,209 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. Earnings Per Share Earnings per share were calculated using the weighted average number of shares outstanding for the related period. The following table illustrates the computation of basic and diluted earnings per share: Year Ended December 31, 2019 2018 2017 (In thousands, except per share data) Numerator: Numerator for basic and diluted earnings per share $ 5,406 $ 14,862 $ 3,765 Denominator: Denominator for basic earnings per share - weighted average number of common shares outstanding during the year 22,416 21,989 22,687 Incremental common shares attributable to exercise of outstanding options and warrants 1,648 2,999 4,527 Denominator for diluted earnings per share 24,064 24,988 27,214 Basic earnings per share $ 0.24 $ 0.68 $ 0.17 Diluted earnings per share $ 0.22 $ 0.59 $ 0.14 Incremental shares of 11.3 million, 10.3 million and 7.5 million related to stock options and warrants have been excluded from the diluted earnings per share calculation for the years ended December 31, 2019, 2018 and 2017, respectively, because the effect is anti-dilutive. Deferral and Amortization of Debt Issuance Costs Costs related to the issuance of debt are deferred and amortized using the interest method over the contractual or expected term of the related debt. Unamortized debt issuance costs are presented as a direct deduction to the carrying amount of the related debt on our Consolidated Balance Sheets. Income Taxes The Company and its subsidiaries file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain states. We utilize the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the future tax consequences attributable to the differences between the financial statement values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We estimate a valuation allowance against that portion of the deferred tax asset whose utilization in future periods is not more than likely. Purchases of Company Stock We record purchases of our own common stock at cost and treat the shares as retired. Stock Option Plan We recognize compensation costs in the financial statements based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. Compensation cost is recognized over the required service period, generally defined as the vesting period. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. These material estimates that could be susceptible to changes in the near term and, accordingly, actual results could differ from those estimates. Reclassification Certain amounts for the prior year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’ equity. Financial Covenants Certain of our securitization transactions, our residual interest financing and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2019 we were in compliance with all such financial covenants. Provision for Contingent Liabilities We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Our legal counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that it is both probable that a liability has been incurred and the amount of the loss can be reasonably determined. We have recorded a liability as of December 31, 2019, which represents our best estimate of the immaterial aggregate probable incurred losses for legal contingencies. The amount of losses that may ultimately be incurred, over and above such losses as are probable, cannot be estimated with certainty. Recently Issued Accounting Standards In 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 beginning after December 15, 2022. Early adoption would still be permitted for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating whether to early adopt the provisions of ASU 2016-13, however, it is expected that the new CECL model will alter the assumptions used in calculating the Company's credit losses for receivables acquired prior to 2018, given the change to estimated losses for the estimated life of the financial asset, and will likely result in a material effect on the Company’s financial position and results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. 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. |
2. Restricted Cash
2. Restricted Cash | 12 Months Ended |
Dec. 31, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Restricted Cash | (2) Restricted Cash Restricted cash consists of cash and cash equivalent accounts relating to our outstanding securitization trusts and credit facilities. The amount of restricted cash on our Consolidated Balance Sheets was $135.5 million and $117.3 million as of December 31, 2019 and 2018, respectively. Our securitization transactions and one of our warehouse credit facilities require that we establish cash reserves, or spread accounts, as additional credit enhancement. These cash reserves, which are included in restricted cash, were $54.8 million and $48.5 million as of December 31, 2019 and 2018, respectively. |
3. Finance Receivables
3. Finance Receivables | 12 Months Ended |
Dec. 31, 2019 | |
Finance Receivables | |
Finance Receivables | (3) Finance Receivables Our portfolio of finance receivables consists of small-balance homogeneous contracts comprising a single segment and class that is collectively evaluated for impairment on a portfolio basis according to delinquency status. Our contract purchase guidelines are designed to produce a homogenous portfolio. We report delinquency on a contractual basis. Once a contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. 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: December 31, 2019 2018 (In thousands) Finance receivables Automobile finance receivables, net of unearned interest $ 895,566 $ 1,518,395 Unearned acquisition fees, discounts and deferred origination costs, net 1,964 3,690 Finance receivable $ 897,530 $ 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 reported as delinquent. In certain circumstances we will grant obligors one-month payment extensions. The only modification of terms is to advance the obligor’s next due date by one month and extend the maturity date of the receivable by one month. In certain limited cases, a two-month extension may be granted. There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, we consider such extensions to be insignificant delays in payments rather than troubled debt restructurings. The following table summarizes the delinquency status of finance receivables as of December 31, 2019 and 2018: December 31, 2019 2018 (In thousands) Delinquency Status Current $ 698,870 $ 1,262,730 31 - 60 days 107,951 157,688 61 - 90 days 57,395 66,134 91 + days 31,350 31,843 $ 895,566 $ 1,518,395 Finance receivables totaling $31.4 million and $31.8 million at December 31, 2019 and 2018, respectively, have been placed on non-accrual status as a result of their delinquency status. We use a loss allowance methodology commonly referred to as "static pooling," which stratifies our finance receivable portfolio into separately identified pools based on the period of origination. Using analytical and formula driven techniques, we estimate an allowance for finance credit losses, which we believe is adequate for probable incurred credit losses that can be reasonably estimated in our portfolio of automobile contracts. The estimate for probable incurred credit losses is reduced by our estimate for future recoveries on previously incurred losses. Provision for credit losses is charged to our consolidated statement of income. Net losses incurred on finance receivables are charged to the allowance. The following table presents a summary of the activity for the allowance for finance credit losses, for the years ended December 31, 2019, 2018 and 2017: December 31, 2019 2018 2017 (In thousands) Balance at beginning of year $ 67,376 $ 109,187 $ 95,578 Provision for credit losses 85,773 133,080 186,713 Charge-offs (184,449 ) (220,523 ) (211,948 ) Recoveries 42,940 45,632 38,844 Balance at end of year $ 11,640 $ 67,376 $ 109,187 Excluded from finance receivables are contracts that were previously classified as finance receivables but were reclassified as other assets because we have repossessed the vehicle securing the Contract. The following table presents a summary of such repossessed inventory together with the allowance for losses on repossessed inventory: December 31, 2019 2018 (In thousands) Gross balance of repossessions in inventory $ 28,933 $ 33,462 Allowance for losses on repossessed inventory (21,389 ) (24,564 ) Net repossessed inventory included in other assets $ 7,544 $ 8,898 |
4. Furniture and Equipment
4. Furniture and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Furniture and Equipment | (4) Furniture and Equipment The following table presents the components of furniture and equipment: December 31, 2019 2018 (In thousands) Furniture and fixtures $ 1,648 $ 1,647 Computer and telephone equipment 6,803 6,203 Leasehold improvements 1,507 1,507 9,958 9,357 Less: accumulated depreciation and amortization (8,446 ) (7,520 ) $ 1,512 $ 1,837 Depreciation expense totaled $1,076,000, $992,000 and $934,000 for the years ended December 31, 2019, 2018 and 2017, respectively. |
5. Securitization Trust Debt
5. Securitization Trust Debt | 12 Months Ended |
Dec. 31, 2019 | |
Securitization Trust Debt | |
Securitization Trust Debt | (5) Securitization Trust Debt We have completed numerous term securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table: Weighted Average Final Receivables Outstanding Outstanding Contractual Scheduled Pledged at Principal at Principal at Interest Rate at Payment December 31, Initial December 31, December 31, December 31, 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 – 273,000 19,758 40,896 5.24% CPS 2014-D March 2022 24,090 267,500 23,755 46,489 5.53% CPS 2015-A June 2022 28,533 245,000 26,713 52,448 5.31% CPS 2015-B September 2022 35,509 250,000 36,338 64,591 5.10% CPS 2015-C December 2022 52,624 300,000 53,579 90,639 5.77% CPS 2016-A March 2023 69,830 329,460 71,599 119,444 6.10% CPS 2016-B June 2023 84,403 332,690 82,667 135,688 6.40% CPS 2016-C September 2023 85,473 318,500 83,696 136,114 6.42% CPS 2016-D April 2024 66,807 206,325 65,021 104,645 4.74% CPS 2017-A April 2024 73,549 206,320 71,450 113,527 4.81% CPS 2017-B December 2023 89,706 225,170 76,201 127,726 4.14% CPS 2017-C September 2024 91,672 224,825 80,315 131,845 4.08% CPS 2017-D June 2024 93,992 196,300 83,801 132,919 3.70% CPS 2018-A March 2025 100,639 190,000 91,258 142,643 3.61% CPS 2018-B December 2024 118,234 201,823 111,188 167,809 4.01% CPS 2018-C September 2025 140,405 230,275 130,064 204,418 4.09% CPS 2018-D June 2025 164,200 233,730 149,470 224,189 4.08% CPS 2019-A March 2026 202,830 254,400 186,900 – 3.95% CPS 2019-B June 2026 193,284 228,275 184,308 – 3.58% CPS 2019-C December 2026 223,764 243,513 216,650 – 3.02% CPS 2019-D March 2027 267,750 274,313 265,035 – 2.60% $ 2,207,294 $ 5,613,919 $ 2,109,766 $ 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 $806.7 million in 2020, $583.8 million in 2021, $358.1 million in 2022, $261.8 million in 2023, $57.5 million in 2024, and $29.9 million in 2025. (2) Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets. Debt issuance costs of $12.0 million and $11.8 million as of December 31, 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 Consolidated Balance Sheets. All of the securitization trust debt was issued in private placement transactions to qualified institutional investors. The debt was issued by our wholly-owned, bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by any of our other assets. The terms of the various securitization agreements related to the issuance of the securitization trust debt require that certain delinquency and credit loss criteria be met with respect to the collateral pool, and require that we maintain minimum levels of liquidity and net worth and not exceed maximum leverage levels. We were in compliance with all such covenants as of December 31, 2019. We are responsible for the administration and collection of the contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional credit enhancement for the Notes or to be applied to make payments on the securitization trust debt. As of December 31, 2019, restricted cash under the various agreements totaled approximately $135.5 million. Interest expense on the securitization trust debt is composed of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, insurance premiums, amortization of deferred financing costs, and amortization of discounts required on the notes at the time of issuance. Deferred financing costs related to the securitization trust debt are amortized using the interest method. Accordingly, the effective cost of borrowing of the securitization trust debt is greater than the stated rate of interest. Our wholly-owned, bankruptcy remote subsidiaries were formed to facilitate the above asset-backed financing transactions. Similar bankruptcy remote subsidiaries issue the debt outstanding under our warehouse line of credit. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. All such transactions, treated as secured financings for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of these subsidiaries are available to pay any of our other creditors. |
6. Debt
6. Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | (6) Debt The terms of our debt outstanding at December 31, 2019 and 2018 are summarized below: December 31, 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 $ 40,558 $ 38,198 3.00% over one month Libor (Minimum 3.75%) September 2020 96,225 99,885 4.00% over a commercial paper rate (Minimum 5.00%) December 2021 – – Residual interest financing 8.60% January 2026 40,000 40,000 Subordinated renewable notes Weighted average rate of 9.75% and 8.53% at December 31, 2019 and December 31, 2018, respectively Weighted average maturity of April 2022 and January 2021 at December 31, 2019 and December 31, 2018, respectively 17,534 17,290 $ 194,317 $ 195,373 Debt issuance costs of $2.0 million and $1.2 million as of December 31, 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 Warehouse lines of credit and residual interest financing on our Consolidated Balance Sheets. On May 11, 2012, we entered into a $100 million one-year warehouse credit line with Citibank, N.A. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Eight Funding, LLC. The facility provides for effective advances up to 87.0% of eligible finance receivables. The loans under the facility accrue interest at one-month LIBOR plus 3.00% per annum, with a minimum rate of 3.75% per annum. In September 2018, this facility was amended to extend the revolving period to September 2020 and to include an amortization period through September 2021 for any receivables pledged to the facility at the end of the revolving period. At December 31, 2019 there was $96.2 million outstanding under this facility. On April 17, 2015, we entered into an additional $100 million one-year warehouse credit line with Fortress Investment Group. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Six Funding, LLC. The facility provides for effective advances up to 88.0% of eligible finance receivables. The loans under the facility accrue interest at one-month LIBOR plus 5.50% per annum, with a minimum rate of 6.50% per annum. In February 2019, this facility was amended to extend the revolving period to February 2021 followed by an amortization period through February 2023 for any receivables pledged to the facility at the end of the revolving period. At December 31, 2019 there was $40.6 million outstanding under this facility. On November 24, 2015, we entered into an additional $100 million one-year warehouse credit line with affiliates of Credit Suisse Group and Ares Management LP. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Nine Funding, LLC. The facility provides for effective advances up to 88.0% of eligible finance receivables. The loans under the facility accrue interest at a commercial paper rate plus 4.00% per annum, with a minimum rate of 5.00% per annum. In December 2019, this facility was amended to extend the revolving period to December 2021 followed by an amortization period through December 2023 for any receivables pledged to the facility at the end of the revolving period. At December 31, 2019 there was no amount outstanding under this facility. The total outstanding debt on our three warehouse lines of credit was $136.8 million as of December 31, 2019, compared to $138.1 million outstanding as of December 31, 2018. The costs incurred in conjunction with the above debt are recorded as deferred financing costs on the accompanying Consolidated Balance Sheets and are more fully described in Note 1. On May 16, 2018, we completed a $40.0 million securitization of residual interests from previously issued securitizations. In this residual interest financing transaction, qualified institutional buyers purchased $40.0 million of asset-backed notes secured by residual interests in thirteen CPS securitizations consecutively conducted from September 2013 through December 2016, and an 80% interest in a CPS affiliate that owns the residual interests in the four CPS securitizations conducted in 2017. The sold notes (“2018-1 Notes”), issued by CPS Auto Securitization Trust 2018-1, consist of a single class with a coupon of 8.595%. The agreed valuation of the collateral for the 2018-1 Notes is the sum of the amounts on deposit in the underlying spread accounts for each related securitization and the over-collateralization of each related securitization, which is the difference between the outstanding principal balances of the related receivables less the principal balance of the outstanding notes issued in the related securitization. With respect to the securitizations conducted by CPS in 2017, only 80% of such amounts are included in the collateral. On each monthly payment date, the 2018-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal payment necessary to maintain a specified minimum collateral ratio. Unamortized debt issuance costs of $522,000 have been excluded from the amount reported above for residual interest financing. These debt issuance costs are presented as a direct deduction to the carrying amount of the debt on our Consolidated Balance Sheets. We must comply with certain affirmative and negative covenants related to debt facilities, which require, among other things, that we maintain certain financial ratios related to liquidity, net worth and capitalization. Further covenants include matters relating to investments, acquisitions, restricted payments and certain dividend restrictions. See the discussion of financial covenants in Note 1. The following table summarizes the contractual and expected maturity amounts of long term debt as of December 31, 2019: Subordinated Contractual maturity renewable date notes (In thousands) 2020 $ 6,006 2021 4,316 2022 2,591 2023 2,121 2024 825 Thereafter 1,675 Total $ 17,534 |
7. Shareholders' Equity
7. Shareholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Shareholders' Equity | (7) Shareholders’ Equity Common Stock Holders of common stock are entitled to such dividends as our board of directors, in its discretion, may declare out of funds available, subject to the terms of any outstanding shares of preferred stock and other restrictions. In the event of liquidation of the Company, holders of common stock are entitled to receive, pro rata Stock Purchases For the year ending December 31, 2019, we purchased 378,470 shares of our common stock at an average price of $3.97. In October 2017 our board of directors authorized the repurchase of up to $10 million of our common stock. There is approximately $6.1 million of board authorization remaining under such plans, which have no expiration date. The table below describes the purchase of our common stock for the twelve-month periods ended December 31, 2019 and 2018: Twelve Months Ended December 31, 2019 December 31, 2018 Shares Avg. Price Shares Avg. Price Open market purchases 335,546 $ 3.95 1,258,797 $ 3.77 Shares redeemed upon net exercise of stock options 18,424 3.76 33,604 4.37 Other 24,500 4.20 90,000 4.13 Total stock purchases 378,470 $ 3.97 1,382,401 $ 3.81 Options and Warrants In 2006, the Company adopted and its shareholders approved the CPS 2006 Long-Term Equity Incentive Plan (the “2006 Plan”) pursuant to which our Board of Directors, or a duly-authorized committee thereof, may grant stock options, restricted stock, restricted stock units and stock appreciation rights to our employees or employees of our subsidiaries, to directors of the Company, and to individuals acting as consultants to the Company or its subsidiaries. In June 2008, May 2012, April 2013, May 2015 and again in July 2018, the shareholders of the Company approved an amendment to the 2006 Plan to increase the maximum number of shares that may be subject to awards under the 2006 Plan to 5,000,000, 7,200,000, 12,200,000, 17,200,000 and 19,200,000, respectively, in each case plus shares authorized under prior plans and not issued. Options that have been granted under the 2006 Plan and a previous plan approved in 1997 have been granted at an exercise price equal to (or greater than) the stock’s fair value at the date of the grant, with terms generally of 7-10 years and vesting generally over 4-5 years. The per share weighted-average fair value of stock options granted during the years ended December 31, 2019, 2018 and 2017 was $1.11, $1.06 and $1.32, respectively. That fair value was estimated using a binomial option pricing model using the weighted average assumptions noted in the following table. We use historical data to estimate the expected term of each option. The volatility estimate is based on the historical and implied volatility of our stock over the period that equals the expected life of the option. Volatility assumptions ranged from 37% to 39% for 2019, 31% to 34% for 2018, and 35% to 37% for 2017. The risk-free interest rate is based on the yield on a U.S. Treasury bond with a maturity comparable to the expected life of the option. The dividend yield is estimated to be zero based on our intention not to issue dividends for the foreseeable future. Year Ended December 31, 2019 2018 2017 Expected life (years) 4.02 3.99 4.02 Risk-free interest rate 1.53% 2.74% 1.59% Volatility 37% 34% 36% Expected dividend yield – – – For the years ended December 31, 2019, 2018 and 2017, we recorded stock-based compensation costs in the amount of $2.1 million, $3.5 million and $5.7 million, respectively. As of December 31, 2019, the unrecognized stock-based compensation costs to be recognized over future periods was equal to $3.1 million. This amount will be recognized as expense over a weighted-average period of 2.1 years. At December 31, 2019 and 2018, options outstanding had intrinsic values of $4.8 million and $4.9 million, respectively. At December 31, 2019 and 2018, options exercisable had intrinsic values of $4.8 million and $4.9 million, respectively. The total intrinsic value of options exercised was $1.4 million and $869,000 for the years ended December 31, 2019 and 2018, respectively. New shares were issued for all options exercised during the year ended December 2019 and cash of $422,000 was received. At December 31, 2019, there were a total of 1,458,000 additional shares available for grant under the 2006 Plan. Stock option activity for the year ended December 31, 2019 for stock options under the 2006 and 1997 plans is as follows: Number of Shares (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term Options outstanding at the beginning of period 14,421 $ 4.57 N/A Granted 1,490 3.53 N/A Exercised (488 ) 0.86 N/A Forfeited/Expired (75 ) 4.00 N/A Options outstanding at the end of period 15,348 $ 4.59 3.34 years Options exercisable at the end of period 11,717 $ 4.87 2.69 years We did not issue any stock options with an exercise price above or below the market price of the stock on the grant date for the years ended December 31, 2019, 2018 and 2017. In connection with the amendment to and partial repayment of our residual interest financing in July 2008, we issued warrants exercisable for 2,500,000 common shares, and allocated $4,071,429 of the aggregate consideration received in that transaction to the issuance of the warrants. The warrants represented the right to purchase CPS common shares at a nominal exercise price. In March 2010 we repurchased the warrants for 500,000 of these shares for $1.0 million. Warrants to purchase 2,000,000 shares were exercised on July 10, 2018 and 1,999,995 net shares were issued to the holder, following surrender of five shares in payment of the exercise price. |
8. Interest Income and Interest
8. Interest Income and Interest Expense | 12 Months Ended |
Dec. 31, 2019 | |
Warehouse lines of credit [Member] | |
Interest Income and Interest Expense | (8) Interest Income and Interest Expense The following table presents the components of interest income: Year Ended December 31, 2019 2018 2017 (In thousands) Interest on finance receivables $ 211,138 $ 334,634 $ 423,567 Interest on finance receivables at fair value 123,059 43,863 – Other interest income 2,899 1,800 607 Interest income $ 337,096 $ 380,297 $ 424,174 The following table presents the components of interest expense: Year Ended December 31, 2019 2018 2017 (In thousands) Securitization trust debt $ 96,870 $ 89,926 $ 83,084 Warehouse lines of credit 8,402 7,752 7,933 Residual interest financing 3,822 2,343 – Subordinated renewable notes 1,434 1,445 1,328 Interest expense $ 110,528 $ 101,466 $ 92,345 |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (9) Income Taxes Income taxes consist of the following: Year Ended December 31, 2019 2018 2017 (In thousands) Current federal tax expense $ (574 ) $ (7,526 ) $ 14,369 Current state tax expense 105 (2,064 ) 3,305 Deferred federal tax expense 2,759 9,074 10,131 Deferred state tax expense 1,466 4,357 501 Income tax expense $ 3,756 $ 3,841 $ 28,306 Income tax expense for the years ended December 31, 2019, 2018 and 2017 differs from the amount determined by applying the statutory federal rate to income before income taxes as follows: Year Ended December 31, 2019 2018 2017 (In thousands) Expense at federal tax rate $ 1,924 $ 3,928 $ 11,225 State taxes, net of federal income tax effect 1,027 1,718 1,831 Stock-based compensation 169 238 682 Non-deductible expenses 856 824 171 Effect of change in tax rate – – 15,117 Accounting method change – (2,100 ) – Other (220 ) (767 ) (720 ) $ 3,756 $ 3,841 $ 28,306 For the year ended December 31, 2018, we recorded income tax expense of $3.8 million which include a $2.1 million net tax benefit related to certain tax planning strategies and other adjustments. Without the benefit, income tax expense for 2018 would have been $5.9 million. The tax effected cumulative temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows: December 31, 2019 2018 (In thousands) Deferred Tax Assets: Finance receivables $ – $ 1,867 Accrued liabilities 307 256 NOL carryforwards 17,240 7,736 Built in losses 4,008 4,651 Pension accrual 1,927 1,552 Stock compensation 4,385 4,161 Lease liability 5,232 – Other 164 356 Total deferred tax assets 33,263 20,579 $ Deferred Tax Liabilities: $ Finance receivables $ (12,180 ) $ – Deferred loan costs (542 ) (1,137 ) Lease right-of-use assets (4,855 ) – Furniture and equipment (206 ) (254 ) Total deferred tax liabilities (17,783 ) (1,391 ) $ Net deferred tax asset $ 15,480 $ 19,188 We acquired certain net operating losses and built-in loss assets as part of our acquisitions of MFN Financial Corp. (“MFN”) in 2002 and TFC Enterprises, Inc. (“TFC”) in 2003. Moreover, both MFN and TFC have undergone an ownership change for purposes of Internal Revenue Code (“IRC”) Section 382. In general, IRC Section 382 imposes an annual limitation on the ability of a loss corporation (that is, a corporation with a net operating loss (“NOL”) carryforward, credit carryforward, or certain built-in losses (“BILs”)) to utilize its pre-change NOL carryforwards or BILs to offset taxable income arising after an ownership change. In determining the possible future realization of deferred tax assets, we have considered future taxable income from the following sources: (a) reversal of taxable temporary differences; and (b) tax planning strategies that, if necessary, would be implemented to accelerate taxable income into years in which net operating losses might otherwise expire. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. A valuation allowance is recognized for a deferred tax asset if, based on the weight of the available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. In making such judgements, significant weight is given to evidence that can be objectively verified. Although realization is not assured, we believe that the realization of the recognized net deferred tax asset of $15.5 million as of December 31, 2019 is more likely than not based on forecasted future net earnings. Our net deferred tax asset of $15.5 million consists of approximately $11.5 million of net U.S. federal deferred tax assets and $4.0 million of net state deferred tax assets. The major components of the deferred tax asset are $21.2 million in net operating loss carryforwards and built in losses. As of December 31, 2019, we had net operating loss carryforwards for state income tax purposes of $70.5 million. These state net operating losses begin to expire in 2024. We recognize a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. We recognize potential interest and penalties related to unrecognized tax benefits as income tax expense. At December 31, 2019, we had no unrecognized tax benefits for uncertain tax positions. We are subject to taxation in the US and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2016. |
10. Related Party Transactions
10. Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (10) Related Party Transactions In December 2007, one of our directors purchased a $4.0 million subordinated renewable note pursuant to our ongoing program of issuing such notes to the public. The note was purchased through the registered agent and under the same terms and conditions, including the interest rate, that were offered to other purchasers at the time the note was issued. The note was redeemed at par plus accrued interest in February 2019. |
11. Commitments and Contingenci
11. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (11) Commitments and Contingencies Leases 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. 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 Condensed Consolidated Balance Sheet at December 31, 2019. The following table presents the supplemental balance sheet information related to leases: Year Ended, December 31, 2019 (In thousands) Operating Leases Operating lease right-of-use assets $ 23,735 Less: Accumulated amortization right-of-use assets (6,600 ) Operating lease right-of-use assets, net $ 17,135 $ Operating lease liabilities (18,527 ) $ Finance Leases $ Property and equipment, at cost $ 876 Less: Accumulated depreciation (150 ) Property and equipment, net $ 726 $ Finance lease liabilities $ (718 ) $ Weighted Average Discount Rate $ Operating lease 5.0% Finance lease 6.4% Maturities of lease liabilities were as follows: (In thousands) Operating Finance Year Ending December 31, Lease Lease 2020 $ 7,757 $ 309 2021 7,449 305 2022 6,058 127 2023 1,389 27 2024 411 13 Thereafter 278 – Total undiscounted lease payments 23,342 781 Less amounts representing interest (4,815 ) (63 ) Lease Liability $ 18,527 $ 718 The following table presents the leases expense included in Occupancy, General and administrative on our Condensed Consolidated Statement of Operations: Year Ended December 31, 2019 2018 2017 (In thousands) Operating lease cost $ 7,521 $ 7,124 $ 6,266 Finance lease cost 160 – – Total lease cost $ 7,681 $ 7,124 $ 6,266 The following table presents the supplemental cash flow information related to leases: Year Ended December 31, 2019 2018 2017 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: $ $ Operating cash flows from operating leases $ 7,584 $ 6,809 $ 6,053 Operating cash flows from finance leases 133 37 73 Financing cash flows from finance leases 27 9 17 Legal Proceedings Consumer Litigation For the most part, we have legal and factual defenses to consumer claims, which we routinely contest or settle (for immaterial amounts) depending on the particular circumstances of each case. 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. |
12. Employee Benefits
12. Employee Benefits | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefits | |
Employee Benefits | (12) Employee Benefits We sponsor a pretax savings and profit sharing plan (the “401(k) Plan”) qualified under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, eligible employees are able to contribute up to the maximum allowed under the law. We may, at our discretion, match 100% of employees’ contributions up to $2,000 per employee per calendar year. Our matching contributions to the 401(k) Plan were $1.6 million, $1.5 million, and $1.2 respectively, for the years ended December 31, 2019, 2018 and 2017. We also sponsor a defined benefit plan, the MFN Financial Corporation Pension Plan (the “Plan”). The Plan benefits were frozen on June 30, 2001. The following tables represents a reconciliation of the change in the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2019 and 2018: December 31, 2019 2018 (In thousands) Change in Projected Benefit Obligation Projected benefit obligation, beginning of year $ 20,085 $ 22,562 Service cost – – Interest cost 808 775 Assumption changes 3,047 (1,867 ) Actuarial (gain) loss 141 (361 ) Settlements – – Benefits paid (1,084 ) (1,024 ) Projected benefit obligation, end of year $ 22,997 $ 20,085 Change in Plan Assets Fair value of plan assets, beginning of year $ 14,368 $ 16,446 Return on assets 3,017 (1,806 ) Employer contribution – 1,000 Expenses (391 ) (248 ) Settlements – – Benefits paid (1,084 ) (1,024 ) Fair value of plan assets, end of year $ 15,910 $ 14,368 Funded Status at end of year $ (7,087 ) $ (5,717 ) Additional Information Weighted average assumptions used to determine benefit obligations and cost at December 31, 2019 and 2018 were as follows: December, 31 2019 2018 Weighted average assumptions used to determine benefit obligations Discount rate 3.07% 4.11% Weighted average assumptions used to determine net periodic benefit cost Discount rate 4.11% 3.50% Expected return on plan assets 7.25% 7.25% Our overall expected long-term rate of return on assets is 7.25% per annum as of December 31, 2019. The expected long-term rate of return is based on the weighted average of historical returns on individual asset categories, which are described in more detail below. December 31, 2019 2018 2017 (In thousands) Amounts recognized on Consolidated Balance Sheet Other assets $ – $ – $ – Other liabilities (7,087 ) (5,717 ) (6,116 ) Net amount recognized $ (7,087 ) $ (5,717 ) $ (6,116 ) Amounts recognized in accumulated other comprehensive loss consists of: Net loss $ 13,092 $ 11,896 $ 11,350 Unrecognized transition asset – – – Net amount recognized $ 13,092 $ 11,896 $ 11,350 Components of net periodic benefit cost Interest cost $ 808 $ 775 $ 855 Expected return on assets (1,012 ) (1,163 ) (1,149 ) Amortization of transition asset – – – Amortization of net loss 376 443 405 Net periodic benefit cost 172 55 111 Settlement (gain)/loss – – – Total $ 172 $ 55 $ 111 Benefit Obligation Recognized in Other Comprehensive Loss (Income) Net loss (gain) $ 1,197 $ 545 $ 732 Prior service cost (credit) – – – Amortization of prior service cost. – – – Net amount recognized in other comprehensive loss (income) $ 1,197 $ 545 $ 732 The estimated net loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2020 is $382,000. The weighted average asset allocation of our pension benefits at December 31, 2019 and 2018 were as follows: December 31, 2019 2018 Weighted Average Asset Allocation at Year-End Asset Category Equity securities 82% 78% Debt securities 18% 22% Cash and cash equivalents 0% 0% Total 100% 100% Our investment policies and strategies for the pension benefits plan utilize a target allocation of 75% equity securities and 25% fixed income securities (excluding Company stock). Our investment goals are to maximize returns subject to specific risk management policies. We address risk management and diversification by the use of a professional investment advisor and several sub-advisors which invest in domestic and international equity securities and domestic fixed income securities. Each sub-advisor focuses its investments within a specific sector of the equity or fixed income market. For the sub-advisors focused on the equity markets, the sectors are differentiated by the market capitalization, the relative valuation and the location of the underlying issuer. For the sub-advisors focused on the fixed income markets, the sectors are differentiated by the credit quality and the maturity of the underlying fixed income investment. The investments made by the sub-advisors are readily marketable and can be sold to fund benefit payment obligations as they become payable. Cash Flows Estimated Future Benefit Payments (In thousands) 2020 $ 870 2021 906 2022 943 2023 966 2024 997 Years 2025 - 2029 5,592 Anticipated Contributions in 2020 $ 1,052 The fair value of plan assets at December 31, 2019 and 2018, by asset category, is as follows: December 31, 2019 Level 1 (1) Level 2 (2) Level 3 (3) Total (in thousands) Investment Name: Company Common Stock $ 2,950 $ – $ – $ 2,950 Large Cap Value – 2,370 – 2,370 Mid Cap Index – 658 – 658 Small Cap Growth – 655 – 655 Small Cap Value – 674 – 674 Large Cap Blend – 683 – 683 Growth – 2,342 – 2,342 International Growth – 2,667 – 2,667 Core Bond – 1,909 – 1,909 High Yield – 386 – 386 Inflation Protected Bond – 509 – 509 Money Market – 107 – 107 Total. $ 2,950 $ 12,960 $ – $ 15,910 December 31, 2018 Level 1 (1) Level 2 (2) Level 3 (3) Total (in thousands) Investment Name: Company Common Stock $ 2,635 $ – $ – $ 2,635 Large Cap Value – 1,983 – 1,983 Mid Cap Index – 563 – 563 Small Cap Growth – 559 – 559 Small Cap Value – 558 – 558 Large Cap Blend – 587 – 587 Growth – 2,031 – 2,031 International Growth – 2,301 – 2,301 Core Bond – 1,921 – 1,921 High Yield. – 364 – 364 Inflation Protected Bond – 510 – 510 Money Market – 356 – 356 Total $ 2,635 $ 11,733 $ – $ 14,368 ________________________ (1) Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. (2) All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. (3) There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs. |
13. Fair Value Measurements
13. Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | (13) Fair Value Measurements ASC 820, "Fair Value Measurements" clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy. ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The three levels are defined as follows: level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. 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: Twelve Months Ended December 31, 2019 2018 (In thousands) Balance at beginning of period $ 821,066 $ – Finance receivables at fair value acquired during period 1,004,194 914,949 Payments received on finance receivables at fair value (292,948 ) (67,720 ) Net interest income accretion on fair value receivables (90,383 ) (26,163 ) Mark to fair value 2,109 – Balance at end of period $ 1,444,038 $ 821,066 The table below compares the fair values of these finance receivables to their contractual balances for the periods shown: December 31, 2019 December 31, 2018 Contractual Fair Contractual Fair Balance Value Balance Value (In thousands) Finance receivables measured at fair value $ 1,492,803 $ 1,444,038 $ 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 December 31, December 31, 2019 2018 Unobservable Inputs 2019 2018 (In thousands) Assets: Finance receivables measured at fair value $ 1,444,038 $ 821,066 Discount rate 8.9% - 11.1% 8.9% - 9.9% Cumulative net losses 15.0% - 16.1% 15% - 16% The following table summarizes the delinquency status using the contractual balance of these finance receivables measured at fair value as of December 31, 2019 and December 31, 2018: December 31, December 31, 2019 2018 (In thousands) Delinquency Status Current $ 1,344,883 $ 787,707 31 - 60 days 81,262 26,285 61 - 90 days 34,280 8,350 91 + days 15,167 3,677 Repo 17,211 3,020 $ 1,492,803 $ 829,039 Repossessed vehicle inventory, which is included in Other assets on our consolidated balance sheet, is measured at fair value using level 2 assumptions based on our actual loss experience on sale of repossessed vehicles. At December 31, 2019, the finance receivables related to the repossessed vehicles in inventory totaled $28.9 million. We have applied a valuation adjustment, or loss allowance, of $21.4 million, which is based on a recovery rate of approximately 26%, resulting in an estimated fair value and carrying amount of $7.5 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 or level 2 assets and liabilities for 2019 and 2018. We have no level 3 assets or liabilities that are measured at fair value on a non-recurring basis. The estimated fair values of financial assets and liabilities at December 31, 2019 and 2018, were as follows: As of December 31, 2019 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 5,295 $ 5,295 $ – $ – $ 5,295 Restricted cash and equivalents 135,537 135,537 – – 135,537 Finance receivables, net 885,890 – – 841,160 841,160 Accrued interest receivable 11,645 – – 11,645 11,645 Liabilities: Warehouse lines of credit $ 134,791 $ – $ – $ 134,791 $ 134,791 Accrued interest payable 5,254 – – 5,254 5,254 Securitization trust debt 2,097,728 – – 2,116,520 2,116,520 Subordinated renewable notes 17,534 – – 17,534 17,534 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 Securitization trust debt 2,063,627 – – 2,051,920 2,051,920 Subordinated renewable notes 17,290 – – 17,290 17,290 |
14. Subsequent Events
14. Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14) Subsequent Events On January 15, 2020 we executed our first securitization of 2020. In the transaction, qualified institutional buyers purchased $260.0 million of asset-backed notes secured by $260.0 million in automobile receivables originated by CPS. The sold notes, issued by CPS Auto Receivables Trust 2020-A, consist of six classes. Ratings of the notes were provided by Moody’s and DBRS, 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 3.08%. The 2020-A transaction has initial credit enhancement consisting of a cash deposit equal to 1.00% of the original receivable pool balance. The transaction agreements require accelerated payment of principal on the notes to reach overcollateralization of the lesser of 4.00% of the original receivable pool balance, or 11.00% of the then outstanding pool balance. The transaction utilized a pre-funding structure, in which CPS sold approximately $170.9 million of receivables at inception and approximately $89.1 million of additional receivables in February 2020. The transaction was a private offering of securities, not registered under the Securities Act of 1933, or any state securities law. |
1. Summary of Significant Acc_2
1. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Consumer Portfolio Services, Inc. ( " " " " " " " " We are subject to various regulations and laws as they relate to the extension of credit in consumer credit transactions. Failure to comply with such laws and regulations could have a material adverse effect on the Company. |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of Consumer Portfolio Services, Inc. and its wholly-owned subsidiaries, certain of which are special purpose subsidiaries ( " " |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of cash on hand and due from banks and money market accounts. Substantially all of our cash is deposited at three financial institutions. We maintain cash due from banks in excess of the banks' insured deposit limits. We do not believe we are exposed to any significant credit risk on these deposits. As part of certain financial covenants related to debt facilities, we are required to maintain a minimum unrestricted cash balance. As of December 31, 2019, our unrestricted cash balance was $5.3 million, which exceeded the minimum amounts required by our financial covenants. |
Finance Receivables | Finance Receivables Finance receivables, which we have the intent and ability to hold for the foreseeable future or until maturity or payoff, are presented at cost. All finance receivable contracts are held for investment. Interest income is accrued on the unpaid principal balance. Origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Generally, payments received on finance receivables are restricted to certain securitized pools, and the related contracts cannot be resold. Finance receivables are charged off pursuant to the controlling documents of certain securitized pools, generally as described below under Charge Off Policy. Management may authorize an extension of payment terms if collection appears likely during the next calendar month. Our portfolio of finance receivables consists of small-balance homogeneous contracts that are collectively evaluated for impairment on a portfolio basis. We report delinquency on a contractual basis. Once a Contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the Contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a Contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction. |
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 December 31, 2019, the net present value of the forecasted cash flows for the receivables acquired in the first and second quarter of 2018 exceeded the carrying value of that pool by $2.1 million, 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. |
Allowance for Finance Credit Losses | Allowance for Finance Credit Losses In order to estimate an appropriate allowance for losses likely incurred on finance receivables, we use a loss allowance methodology commonly referred to as " " |
Charge Off Policy | Charge Off Policy Delinquent contracts for which the related financed vehicle has been repossessed are generally charged off at the earliest of (1) the month in which the proceeds from the sale of the financed vehicle are received, (2) the month in which 90 days have passed from the date of repossession or (3) the month in which the Contract becomes seven scheduled payments past due (see Repossessed and Other Assets below). The amount charged off is the remaining principal balance of the Contract, after the application of the net proceeds from the liquidation of the financed vehicle. With respect to delinquent contracts for which the related financed vehicle has not been repossessed, the remaining principal balance is generally charged off no later than the end of the month that the Contract becomes five scheduled payments past due. |
Contract Acquisition Fees and Origination Costs | Contract Acquisition Fees and Origination Costs Upon purchase of a Contract from a Dealer, we generally either charge or advance the Dealer an acquisition fee. Dealer acquisition fees and deferred origination costs are applied to the carrying value of finance receivables and are accreted into earnings as an adjustment to the yield over the estimated life of the Contract using the interest method. However, for receivables measured at fair value, 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. |
Repossessed and Other Assets | Repossessed and Other Assets If a Contract obligor fails to make or keep promises for payments, or if the obligor is uncooperative or attempts to evade contact or hide the vehicle, a supervisor will review the collection activity relating to the account to determine if repossession of the vehicle is warranted. Generally, such a decision is made between the 60th and 90th day past the obligor’s payment due date, but could occur sooner or later, depending on the specific circumstances. At the time the vehicle is repossessed we stop accruing interest on the Contract, and reclassify the remaining Contract balance to the line item "Other Assets" on our Consolidated Balance Sheet at its estimated fair value less costs to sell. Included in other assets in the accompanying Consolidated Balance Sheets are repossessed vehicles pending sale of $7.5 million and $8.9 million at December 31, 2019 and 2018, respectively. |
Treatment of Securitizations | Treatment of Securitizations Our term securitization structure has generally been as follows: We sell contracts we acquire to a wholly-owned SPS, which has been established for the limited purpose of buying and reselling our contracts. The SPS then transfers the same contracts to another entity, typically a statutory trust ( " " " " " " " " " " " " Our warehouse securitization structures are similar to the above, except that (i) the SPS that purchases the contracts pledges the contracts to secure promissory notes or loans that it issues, and (ii) no increase in the required amount of Credit Enhancement is contemplated. Upon each sale of contracts in a securitization structured as a secured financing, we retain as assets on our Consolidated Balance Sheet the securitized contracts and record as indebtedness the Notes issued in the transaction. We have the power to direct the most significant activities of the SPS. In addition, we have the obligation to absorb losses and the rights to receive benefits from the SPS, both of which could be potentially significant to the SPS. These types of securitization structures are treated as secured financings, in which the receivables remain on our Consolidated Balance Sheet, and the debt issued by the SPS is shown as a securitization trust debt on our Consolidated Balance Sheet. We receive periodic base servicing fees for the servicing and collection of the contracts. In addition, we are entitled to the cash flows from the Trusts that represent collections on the contracts in excess of the amounts required to pay principal and interest on the Notes, the base servicing fees, and certain other fees (such as trustee and custodial fees). Required principal payments on the Notes are generally defined as the payments sufficient to keep the principal balance of the Notes equal to the aggregate principal balance of the related contracts (excluding those contracts that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related Securitization Agreements require accelerated payment of principal until the principal balance of the Notes is reduced to the specified percentage. Such accelerated principal payment is said to create " " If the amount of cash required for payment of fees, interest and principal on the senior Notes exceeds the amount collected during the collection period, the shortfall is generally withdrawn from the Spread Account, if any. If the cash collected during the period exceeds the amount necessary for the above allocations plus required principal payments on the subordinated Notes, if any, and there is no shortfall in the related Spread Account or other form of Credit Enhancement, the excess is released to us. If the total Credit Enhancement amount is not at the required level, then the excess cash collected is retained in the Trust until the specified level is achieved. Cash in the Spread Accounts is restricted from our use. Cash held in the various Spread Accounts is invested in high quality, liquid investment securities, as specified in the Securitization Agreements. In all of our term securitizations we have transferred the receivables (through a subsidiary) to the securitization Trust. We report the assets and liabilities of the securitization Trust on our Consolidated Balance Sheet. The Noteholders’ and the related securitization Trusts’ recourse against us for failure of the contract obligors to make payments on a timely basis is limited, in general, to our Finance Receivables, and Spread Accounts. |
Servicing | Servicing We consider the contractual servicing fee received on our managed portfolio held by non-consolidated subsidiaries to be equal to adequate compensation. Additionally, we consider that these fees would fairly compensate a substitute servicer, should one be required. As a result, no servicing asset or liability has been recognized. Servicing fees received on the managed portfolio held by non-consolidated subsidiaries are reported as income when earned. Servicing fees received on the managed portfolio held by consolidated subsidiaries are included in interest income when earned. Servicing costs are charged to expense as incurred. Servicing fees receivable, which are included in Other Assets in the accompanying Consolidated Balance Sheets, represent fees earned but not yet remitted to us by the trustee. |
Furniture and Equipment | Furniture and Equipment Furniture and equipment are stated at cost net of accumulated depreciation. We calculate depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Assets held under capital leases and leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related lease terms. Amortization expense on assets acquired under capital lease is included with depreciation expense on owned assets. |
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of | Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. |
Other Income | Other Income The following table presents the primary components of Other Income: Year Ended December 31, 2019 2018 2017 (In thousands) Direct mail revenues $ 4,659 $ 5,829 $ 6,432 Convenience fee revenue 2,440 1,700 1,900 Recoveries on previously charged-off contracts 158 248 563 Sales tax refunds 1,239 887 866 Other 208 814 448 Other income for the period $ 8,704 $ 9,478 $ 10,209 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. |
Earnings Per Share | Earnings Per Share Earnings per share were calculated using the weighted average number of shares outstanding for the related period. The following table illustrates the computation of basic and diluted earnings per share: Year Ended December 31, 2019 2018 2017 (In thousands, except per share data) Numerator: Numerator for basic and diluted earnings per share $ 5,406 $ 14,862 $ 3,765 Denominator: Denominator for basic earnings per share - weighted average number of common shares outstanding during the year 22,416 21,989 22,687 Incremental common shares attributable to exercise of outstanding options and warrants 1,648 2,999 4,527 Denominator for diluted earnings per share 24,064 24,988 27,214 Basic earnings per share $ 0.24 $ 0.68 $ 0.17 Diluted earnings per share $ 0.22 $ 0.59 $ 0.14 Incremental shares of 11.3 million, 10.3 million and 7.5 million related to stock options and warrants have been excluded from the diluted earnings per share calculation for the years ended December 31, 2019, 2018 and 2017, respectively, because the effect is anti-dilutive. |
Deferral and Amortization of Debt Issuance Costs | Deferral and Amortization of Debt Issuance Costs Costs related to the issuance of debt are deferred and amortized using the interest method over the contractual or expected term of the related debt. Unamortized debt issuance costs are presented as a direct deduction to the carrying amount of the related debt on our Consolidated Balance Sheets. |
Income Taxes | Income Taxes The Company and its subsidiaries file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain states. We utilize the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the future tax consequences attributable to the differences between the financial statement values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We estimate a valuation allowance against that portion of the deferred tax asset whose utilization in future periods is not more than likely. |
Purchases of Company Stock | Purchases of Company Stock We record purchases of our own common stock at cost and treat the shares as retired. |
Stock Option Plan | Stock Option Plan We recognize compensation costs in the financial statements based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. Compensation cost is recognized over the required service period, generally defined as the vesting period. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. These material estimates that could be susceptible to changes in the near term and, accordingly, actual results could differ from those estimates. |
Reclassification | Reclassification Certain amounts for the prior year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’ equity. |
Financial Covenants | Financial Covenants Certain of our securitization transactions, our residual interest financing and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. In addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default occurred under a different facility. As of December 31, 2019 we were in compliance with all such financial covenants. |
Provision for Contingent Liabilities | Provision for Contingent Liabilities We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Our legal counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that it is both probable that a liability has been incurred and the amount of the loss can be reasonably determined. We have recorded a liability as of December 31, 2019, which represents our best estimate of the immaterial aggregate probable incurred losses for legal contingencies. The amount of losses that may ultimately be incurred, over and above such losses as are probable, cannot be estimated with certainty. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In 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 beginning after December 15, 2022. Early adoption would still be permitted for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating whether to early adopt the provisions of ASU 2016-13, however, it is expected that the new CECL model will alter the assumptions used in calculating the Company's credit losses for receivables acquired prior to 2018, given the change to estimated losses for the estimated life of the financial asset, and will likely result in a material effect on the Company’s financial position and results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. 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. |
1. Summary of Significant Acc_3
1. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of other income | The following table presents the primary components of Other Income: Year Ended December 31, 2019 2018 2017 (In thousands) Direct mail revenues $ 4,659 $ 5,829 $ 6,432 Convenience fee revenue 2,440 1,700 1,900 Recoveries on previously charged-off contracts 158 248 563 Sales tax refunds 1,239 887 866 Other 208 814 448 Other income for the period $ 8,704 $ 9,478 $ 10,209 |
Schedule of computation of earnings per share | Earnings per share were calculated using the weighted average number of shares outstanding for the related period. The following table illustrates the computation of basic and diluted earnings per share: Year Ended December 31, 2019 2018 2017 (In thousands, except per share data) Numerator: Numerator for basic and diluted earnings per share $ 5,406 $ 14,862 $ 3,765 Denominator: Denominator for basic earnings per share - weighted average number of common shares outstanding during the year 22,416 21,989 22,687 Incremental common shares attributable to exercise of outstanding options and warrants 1,648 2,999 4,527 Denominator for diluted earnings per share 24,064 24,988 27,214 Basic earnings per share $ 0.24 $ 0.68 $ 0.17 Diluted earnings per share $ 0.22 $ 0.59 $ 0.14 |
3. Finance Receivables (Tables)
3. Finance Receivables (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Finance Receivables | |
Schedule of finance receivables | The following table presents the components of finance receivables, net of unearned interest: December 31, 2019 2018 (In thousands) Finance receivables Automobile finance receivables, net of unearned interest $ 895,566 $ 1,518,395 Unearned acquisition fees, discounts and deferred origination costs, net 1,964 3,690 Finance receivable $ 897,530 $ 1,522,085 |
Schedule of delinquency status of finance receivables | The following table summarizes the delinquency status of finance receivables as of December 31, 2019 and 2018: December 31, 2019 2018 (In thousands) Delinquency Status Current $ 698,870 $ 1,262,730 31 - 60 days 107,951 157,688 61 - 90 days 57,395 66,134 91 + days 31,350 31,843 $ 895,566 $ 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 years ended December 31, 2019, 2018 and 2017: December 31, 2019 2018 2017 (In thousands) Balance at beginning of year $ 67,376 $ 109,187 $ 95,578 Provision for credit losses 85,773 133,080 186,713 Charge-offs (184,449 ) (220,523 ) (211,948 ) Recoveries 42,940 45,632 38,844 Balance at end of year $ 11,640 $ 67,376 $ 109,187 |
Schedule of allowance for losses on repossessed inventory | The following table presents a summary of such repossessed inventory together with the allowance for losses on repossessed inventory: December 31, 2019 2018 (In thousands) Gross balance of repossessions in inventory $ 28,933 $ 33,462 Allowance for losses on repossessed inventory (21,389 ) (24,564 ) Net repossessed inventory included in other assets $ 7,544 $ 8,898 |
4. Furniture and Equipment (Tab
4. Furniture and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of furniture and equipment | The following table presents the components of furniture and equipment: December 31, 2019 2018 (In thousands) Furniture and fixtures $ 1,648 $ 1,647 Computer and telephone equipment 6,803 6,203 Leasehold improvements 1,507 1,507 9,958 9,357 Less: accumulated depreciation and amortization (8,446 ) (7,520 ) $ 1,512 $ 1,837 |
5. Securitization Trust Debt (T
5. Securitization Trust Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Securitization Trust Debt | |
Schedule of securitization trust debt | Weighted Average Final Receivables Outstanding Outstanding Contractual Scheduled Pledged at Principal at Principal at Interest Rate at Payment December 31, Initial December 31, December 31, December 31, 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 – 273,000 19,758 40,896 5.24% CPS 2014-D March 2022 24,090 267,500 23,755 46,489 5.53% CPS 2015-A June 2022 28,533 245,000 26,713 52,448 5.31% CPS 2015-B September 2022 35,509 250,000 36,338 64,591 5.10% CPS 2015-C December 2022 52,624 300,000 53,579 90,639 5.77% CPS 2016-A March 2023 69,830 329,460 71,599 119,444 6.10% CPS 2016-B June 2023 84,403 332,690 82,667 135,688 6.40% CPS 2016-C September 2023 85,473 318,500 83,696 136,114 6.42% CPS 2016-D April 2024 66,807 206,325 65,021 104,645 4.74% CPS 2017-A April 2024 73,549 206,320 71,450 113,527 4.81% CPS 2017-B December 2023 89,706 225,170 76,201 127,726 4.14% CPS 2017-C September 2024 91,672 224,825 80,315 131,845 4.08% CPS 2017-D June 2024 93,992 196,300 83,801 132,919 3.70% CPS 2018-A March 2025 100,639 190,000 91,258 142,643 3.61% CPS 2018-B December 2024 118,234 201,823 111,188 167,809 4.01% CPS 2018-C September 2025 140,405 230,275 130,064 204,418 4.09% CPS 2018-D June 2025 164,200 233,730 149,470 224,189 4.08% CPS 2019-A March 2026 202,830 254,400 186,900 – 3.95% CPS 2019-B June 2026 193,284 228,275 184,308 – 3.58% CPS 2019-C December 2026 223,764 243,513 216,650 – 3.02% CPS 2019-D March 2027 267,750 274,313 265,035 – 2.60% $ 2,207,294 $ 5,613,919 $ 2,109,766 $ 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 $806.7 million in 2020, $583.8 million in 2021, $358.1 million in 2022, $261.8 million in 2023, $57.5 million in 2024, and $29.9 million in 2025. (2) Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets. |
6. Debt (Tables)
6. Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of debt outstanding | The terms of our debt outstanding at December 31, 2019 and 2018 are summarized below: December 31, 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 $ 40,558 $ 38,198 3.00% over one month Libor (Minimum 3.75%) September 2020 96,225 99,885 4.00% over a commercial paper rate (Minimum 5.00%) December 2021 – – Residual interest financing 8.60% January 2026 40,000 40,000 Subordinated renewable notes Weighted average rate of 9.75% and 8.53% at December 31, 2019 and December 31, 2018, respectively Weighted average maturity of April 2022 and January 2021 at December 31, 2019 and December 31, 2018, respectively 17,534 17,290 $ 194,317 $ 195,373 |
Schedule of expected maturity amounts for long-term debt | Subordinated Contractual maturity renewable date notes (In thousands) 2020 $ 6,006 2021 4,316 2022 2,591 2023 2,121 2024 825 Thereafter 1,675 Total $ 17,534 |
7. Shareholders' Equity (Tables
7. Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of stock purchases | The table below describes the purchase of our common stock for the twelve-month periods ended December 31, 2019 and 2018: Twelve Months Ended December 31, 2019 December 31, 2018 Shares Avg. Price Shares Avg. Price Open market purchases 335,546 $ 3.95 1,258,797 $ 3.77 Shares redeemed upon net exercise of stock options 18,424 3.76 33,604 4.37 Other 24,500 4.20 90,000 4.13 Total stock purchases 378,470 $ 3.97 1,382,401 $ 3.81 |
Schedule of assumptions for stock options | The dividend yield is estimated to be zero based on our intention not to issue dividends for the foreseeable future. Year Ended December 31, 2019 2018 2017 Expected life (years) 4.02 3.99 4.02 Risk-free interest rate 1.53% 2.74% 1.59% Volatility 37% 34% 36% Expected dividend yield – – – |
Schedule of option activity | Number of Shares (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term Options outstanding at the beginning of period 14,421 $ 4.57 N/A Granted 1,490 3.53 N/A Exercised (488 ) 0.86 N/A Forfeited/Expired (75 ) 4.00 N/A Options outstanding at the end of period 15,348 $ 4.59 3.34 years Options exercisable at the end of period 11,717 $ 4.87 2.69 years |
8. Interest Income and Intere_2
8. Interest Income and Interest Expense (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Warehouse lines of credit [Member] | |
Schedule of interest income | Year Ended December 31, 2019 2018 2017 (In thousands) Interest on finance receivables $ 211,138 $ 334,634 $ 423,567 Interest on finance receivables at fair value 123,059 43,863 – Other interest income 2,899 1,800 607 Interest income $ 337,096 $ 380,297 $ 424,174 |
Schedule of interest expense | The following table presents the components of interest expense: Year Ended December 31, 2019 2018 2017 (In thousands) Securitization trust debt $ 96,870 $ 89,926 $ 83,084 Warehouse lines of credit 8,402 7,752 7,933 Residual interest financing 3,822 2,343 – Subordinated renewable notes 1,434 1,445 1,328 Interest expense $ 110,528 $ 101,466 $ 92,345 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | Income taxes consist of the following: Year Ended December 31, 2019 2018 2017 (In thousands) Current federal tax expense $ (574 ) $ (7,526 ) $ 14,369 Current state tax expense 105 (2,064 ) 3,305 Deferred federal tax expense 2,759 9,074 10,131 Deferred state tax expense 1,466 4,357 501 Income tax expense $ 3,756 $ 3,841 $ 28,306 |
Schedule of reconciliation of income taxes | Income tax expense for the years ended December 31, 2019, 2018 and 2017 differs from the amount determined by applying the statutory federal rate to income before income taxes as follows: Year Ended December 31, 2019 2018 2017 (In thousands) Expense at federal tax rate $ 1,924 $ 3,928 $ 11,225 State taxes, net of federal income tax effect 1,027 1,718 1,831 Stock-based compensation 169 238 682 Non-deductible expenses 856 824 171 Effect of change in tax rate – – 15,117 Accounting method change – (2,100 ) – Other (220 ) (767 ) (720 ) $ 3,756 $ 3,841 $ 28,306 |
Schedule of deferred tax assets and liabilities | December 31, 2019 2018 (In thousands) Deferred Tax Assets: Finance receivables $ – $ 1,867 Accrued liabilities 307 256 NOL carryforwards 17,240 7,736 Built in losses 4,008 4,651 Pension accrual 1,927 1,552 Stock compensation 4,385 4,161 Lease liability 5,232 – Other 164 356 Total deferred tax assets 33,263 20,579 $ Deferred Tax Liabilities: $ Finance receivables $ (12,180 ) $ – Deferred loan costs (542 ) (1,137 ) Lease right-of-use assets (4,855 ) – Furniture and equipment (206 ) (254 ) Total deferred tax liabilities (17,783 ) (1,391 ) $ Net deferred tax asset $ 15,480 $ 19,188 |
11. Commitments and Contingen_2
11. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease table | The following table presents the supplemental balance sheet information related to leases: Year Ended, December 31, 2019 (In thousands) Operating Leases Operating lease right-of-use assets $ 23,735 Less: Accumulated amortization right-of-use assets (6,600 ) Operating lease right-of-use assets, net $ 17,135 $ Operating lease liabilities (18,527 ) |
Finance lease table | The following table presents the supplemental balance sheet information related to leases: Year Ended, December 31, 2019 (In thousands) Finance Leases $ Property and equipment, at cost $ 876 Less: Accumulated depreciation (150 ) Property and equipment, net $ 726 $ Finance lease liabilities $ (718 ) $ Weighted Average Discount Rate $ Operating lease 5.0% Finance lease 6.4% |
Maturities of lease liabilities | Maturities of lease liabilities were as follows: (In thousands) Operating Finance Year Ending December 31, Lease Lease 2020 $ 7,757 $ 309 2021 7,449 305 2022 6,058 127 2023 1,389 27 2024 411 13 Thereafter 278 – Total undiscounted lease payments 23,342 781 Less amounts representing interest (4,815 ) (63 ) Lease Liability $ 18,527 $ 718 |
Schedule of lease costs | The following table presents the leases expense included in Occupancy, General and administrative on our Condensed Consolidated Statement of Operations: Year Ended December 31, 2019 2018 2017 (In thousands) Operating lease cost $ 7,521 $ 7,124 $ 6,266 Finance lease cost 160 – – Total lease cost $ 7,681 $ 7,124 $ 6,266 |
Cash flow information related to leases | The following table presents the supplemental cash flow information related to leases: Year Ended December 31, 2019 2018 2017 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: $ $ Operating cash flows from operating leases $ 7,584 $ 6,809 $ 6,053 Operating cash flows from finance leases 133 37 73 Financing cash flows from finance leases 27 9 17 |
12. Employee Benefits (Tables)
12. Employee Benefits (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefits | |
Schedule of reconciliation of the change in the plan's benefit obligations | The following tables represents a reconciliation of the change in the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2019 and 2018: December 31, 2019 2018 (In thousands) Change in Projected Benefit Obligation Projected benefit obligation, beginning of year $ 20,085 $ 22,562 Service cost – – Interest cost 808 775 Assumption changes 3,047 (1,867 ) Actuarial (gain) loss 141 (361 ) Settlements – – Benefits paid (1,084 ) (1,024 ) Projected benefit obligation, end of year $ 22,997 $ 20,085 Change in Plan Assets Fair value of plan assets, beginning of year $ 14,368 $ 16,446 Return on assets 3,017 (1,806 ) Employer contribution – 1,000 Expenses (391 ) (248 ) Settlements – – Benefits paid (1,084 ) (1,024 ) Fair value of plan assets, end of year $ 15,910 $ 14,368 Funded Status at end of year $ (7,087 ) $ (5,717 ) |
Schedule of weighted average assumptions used to determine pension benefit obligations | Weighted average assumptions used to determine benefit obligations and cost at December 31, 2019 and 2018 were as follows: December, 31 2019 2018 Weighted average assumptions used to determine benefit obligations Discount rate 3.07% 4.11% Weighted average assumptions used to determine net periodic benefit cost Discount rate 4.11% 3.50% Expected return on plan assets 7.25% 7.25% |
Schedule of components of net periodic benefit cost | Our overall expected long-term rate of return on assets is 7.25% per annum as of December 31, 2019. The expected long-term rate of return is based on the weighted average of historical returns on individual asset categories, which are described in more detail below. December 31, 2019 2018 2017 (In thousands) Amounts recognized on Consolidated Balance Sheet Other assets $ – $ – $ – Other liabilities (7,087 ) (5,717 ) (6,116 ) Net amount recognized $ (7,087 ) $ (5,717 ) $ (6,116 ) Amounts recognized in accumulated other comprehensive loss consists of: Net loss $ 13,092 $ 11,896 $ 11,350 Unrecognized transition asset – – – Net amount recognized $ 13,092 $ 11,896 $ 11,350 Components of net periodic benefit cost Interest cost $ 808 $ 775 $ 855 Expected return on assets (1,012 ) (1,163 ) (1,149 ) Amortization of transition asset – – – Amortization of net loss 376 443 405 Net periodic benefit cost 172 55 111 Settlement (gain)/loss – – – Total $ 172 $ 55 $ 111 Benefit Obligation Recognized in Other Comprehensive Loss (Income) Net loss (gain) $ 1,197 $ 545 $ 732 Prior service cost (credit) – – – Amortization of prior service cost – – – Net amount recognized in other comprehensive loss (income) $ 1,197 $ 545 $ 732 |
Schedule of weighted average asset allocation of our pension benefits | The weighted average asset allocation of our pension benefits at December 31, 2019 and 2018 were as follows: December 31, 2019 2018 Weighted Average Asset Allocation at Year-End Asset Category Equity securities 82% 78% Debt securities 18% 22% Cash and cash equivalents 0% 0% Total 100% 100% |
Schedule of estimated Future Benefit Payments | Cash Flows Estimated Future Benefit Payments (In thousands) 2020 $ 870 2021 906 2022 943 2023 966 2024 997 Years 2025 - 2029 5,592 Anticipated Contributions in 2020 $ 1,052 |
Schedule of fair value of plan assets | The fair value of plan assets at December 31, 2019 and 2018, by asset category, is as follows: December 31, 2019 Level 1 (1) Level 2 (2) Level 3 (3) Total (in thousands) Investment Name: Company Common Stock $ 2,950 $ – $ – $ 2,950 Large Cap Value – 2,370 – 2,370 Mid Cap Index – 658 – 658 Small Cap Growth – 655 – 655 Small Cap Value – 674 – 674 Large Cap Blend – 683 – 683 Growth – 2,342 – 2,342 International Growth – 2,667 – 2,667 Core Bond – 1,909 – 1,909 High Yield – 386 – 386 Inflation Protected Bond – 509 – 509 Money Market – 107 – 107 Total. $ 2,950 $ 12,960 $ – $ 15,910 December 31, 2018 Level 1 (1) Level 2 (2) Level 3 (3) Total (in thousands) Investment Name: Company Common Stock $ 2,635 $ – $ – $ 2,635 Large Cap Value – 1,983 – 1,983 Mid Cap Index – 563 – 563 Small Cap Growth – 559 – 559 Small Cap Value – 558 – 558 Large Cap Blend – 587 – 587 Growth – 2,031 – 2,031 International Growth – 2,301 – 2,301 Core Bond – 1,921 – 1,921 High Yield – 364 – 364 Inflation Protected Bond – 510 – 510 Money Market – 356 – 356 Total $ 2,635 $ 11,733 $ – $ 14,368 ________________________ (1) Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. (2) All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. (3) There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs. |
13. Fair Value Measurements (Ta
13. Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 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: Twelve Months Ended December 31, 2019 2018 (In thousands) Balance at beginning of period $ 821,066 $ – Finance receivables at fair value acquired during period 1,004,194 914,949 Payments received on finance receivables at fair value (292,948 ) (67,720 ) Net interest income accretion on fair value receivables (90,383 ) (26,163 ) Mark to fair value 2,109 – Balance at end of period $ 1,444,038 $ 821,066 |
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: December 31, 2019 December 31, 2018 Contractual Fair Contractual Fair Balance Value Balance Value (In thousands) Finance receivables measured at fair value $ 1,492,803 $ 1,444,038 $ 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 December 31, December 31, 2019 2018 Unobservable Inputs 2019 2018 (In thousands) Assets: Finance receivables measured at fair value $ 1,444,038 $ 821,066 Discount rate 8.9% - 11.1% 8.9% - 9.9% Cumulative net losses 15.0% - 16.1% 15% - 16% |
Schedule of delinquency status of finance receivables measured at fair value | December 31, December 31, 2019 2018 (In thousands) Delinquency Status Current $ 1,344,883 $ 787,707 31 - 60 days 81,262 26,285 61 - 90 days 34,280 8,350 91 + days 15,167 3,677 Repo 17,211 3,020 $ 1,492,803 $ 829,039 |
Schedule of estimated fair values of financial assets and liabilities | The estimated fair values of financial assets and liabilities at December 31, 2019 and 2018, were as follows: As of December 31, 2019 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 5,295 $ 5,295 $ – $ – $ 5,295 Restricted cash and equivalents 135,537 135,537 – – 135,537 Finance receivables, net 885,890 – – 841,160 841,160 Accrued interest receivable 11,645 – – 11,645 11,645 Liabilities: Warehouse lines of credit $ 134,791 $ – $ – $ 134,791 $ 134,791 Accrued interest payable 5,254 – – 5,254 5,254 Securitization trust debt 2,097,728 – – 2,116,520 2,116,520 Subordinated renewable notes 17,534 – – 17,534 17,534 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 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 | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Primary components of Other Income | |||
Other income for the period | $ 8,704 | $ 9,478 | $ 10,209 |
Direct Mail Revenues [Member] | |||
Primary components of Other Income | |||
Other income for the period | 4,659 | 5,829 | 6,432 |
Convenience Fee Revenue [Member] | |||
Primary components of Other Income | |||
Other income for the period | 2,440 | 1,700 | 1,900 |
Recoveries on Previously Charged-Off Contracts [Member] | |||
Primary components of Other Income | |||
Other income for the period | 158 | 248 | 563 |
Sales Tax Refunds [Member] | |||
Primary components of Other Income | |||
Other income for the period | 1,239 | 887 | 866 |
Other Income [Member] | |||
Primary components of Other Income | |||
Other income for the period | $ 208 | $ 814 | $ 448 |
1. Summary of Significant Acc_5
1. Summary of Significant Accounting Policies (Details - Earnings Per Share) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Numerator for basic and diluted earnings per share | $ 5,406 | $ 14,862 | $ 3,765 |
Denominator for basic earnings per share - weighted average number of common shares outstanding during the year | 22,416 | 21,989 | 22,687 |
Incremental common shares attibutable to exercise of outstanding options and warrants | 1,648 | 2,999 | 4,527 |
Denominator for diluted earnings per share | 24,064 | 24,988 | 27,214 |
Basic earnings per share | $ 0.24 | $ 0.68 | $ 0.17 |
Diluted earnings per share | $ 0.22 | $ 0.59 | $ 0.14 |
1. Summary of Significant Acc_6
1. Summary of Significant Accounting Policies (Details Narrative) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017shares | |
Unrestricted cash balance | $ 5,295 | $ 12,787 | |
Other assets | $ 39,852 | $ 26,801 | |
Incremental shares excluded from EPS calculation | shares | 11,300 | 10,300 | 7,500 |
CPS Leasing, Inc. [Member] | |||
Ownership percentage in subsidiary | 0.80 | ||
Repossessed Vehicles [Member] | |||
Other assets | $ 7,500 | $ 8,900 | |
Dealer concentration [Member] | Geographic Concentration [Member] | CALIFORNIA | |||
Concentration percentage | 12.60% | 8.70% | |
Dealer concentration [Member] | Geographic Concentration [Member] | OHIO | |||
Concentration percentage | 10.80% | 8.80% | |
Dealer concentration [Member] | Geographic Concentration [Member] | INDIANA | |||
Concentration percentage | 6.30% | 5.20% | |
Dealer concentration [Member] | Geographic Concentration [Member] | NORTH CAROLINA | |||
Concentration percentage | 5.40% | 6.20% | |
Dealer concentration [Member] | Geographic Concentration [Member] | FLORIDA | |||
Concentration percentage | 4.90% | 6.00% |
2. Restricted Cash (Details Nar
2. Restricted Cash (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Restricted cash | $ 135,537 | $ 117,323 |
Securitizations and Credit Facility Reserves [Member] | ||
Restricted cash | $ 54,800 | $ 48,500 |
3. Finance Receivables (Details
3. Finance Receivables (Details - Components of Finance Receivables) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Finance receivables | ||
Automobile finance receivables, net of unearned interest | $ 895,566 | $ 1,518,395 |
Unearned acquisition fees and originations costs | 1,964 | 3,690 |
Finance Receivables | $ 897,530 | $ 1,522,085 |
3. Finance Receivables (Detai_2
3. Finance Receivables (Details - Delinquency status) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Delinquency Status | ||
Finance receivables, past due | $ 895,566 | $ 1,518,395 |
Current [Member] | ||
Delinquency Status | ||
Finance receivables, past due | 698,870 | 1,262,730 |
31 to 60 Days [Member] | ||
Delinquency Status | ||
Finance receivables, past due | 107,951 | 157,688 |
61 to 90 Days [Member] | ||
Delinquency Status | ||
Finance receivables, past due | 57,395 | 66,134 |
91 + Days [Member] | ||
Delinquency Status | ||
Finance receivables, past due | $ 31,350 | $ 31,843 |
3. Finance Receivables (Detai_3
3. Finance Receivables (Details - Summary of activity) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finance Receivables | |||
Balance at beginning of year | $ 67,376 | $ 109,187 | $ 95,578 |
Provision for credit losses | 85,773 | 133,080 | 186,713 |
Charge-offs | (184,449) | (220,523) | (211,948) |
Recoveries | 42,940 | 45,632 | 38,844 |
Balance at end of year | $ 11,640 | $ 67,376 | $ 109,187 |
3. Finance Receivables (Detai_4
3. Finance Receivables (Details - Repossessed inventory) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Finance Receivables | ||
Gross balance of repossessions in inventory | $ 28,933 | $ 33,462 |
Allowance for losses on repossessed inventory | (21,389) | (24,564) |
Net repossessed inventory included in other assets | $ 7,544 | $ 8,898 |
3. Finance Receivables (Detai_5
3. Finance Receivables (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Finance Receivables | ||
Finance receivables | $ 31,400 | $ 31,800 |
4. Furniture and Equipment (Det
4. Furniture and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Furniture and equipment, gross | $ 9,958 | $ 9,357 |
Less: accumulated depreciation and amortization | (8,446) | (7,520) |
Furniture and equipment, net | 1,512 | 1,837 |
Furniture and Fixtures [Member] | ||
Furniture and equipment, gross | 1,648 | 1,647 |
Computer and Telephone Equipment [Member] | ||
Furniture and equipment, gross | 6,803 | 6,203 |
Leasehold Improvements [Member] | ||
Furniture and equipment, gross | $ 1,507 | $ 1,507 |
4. Furniture and Equipment (D_2
4. Furniture and Equipment (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 1,076 | $ 992 | $ 934 |
5. Securitization Trust Debt (D
5. Securitization Trust Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
"Securitization trust debt," and components of debt | |||
Receivables Pledged at end of period | [1] | $ 2,207,294 | |
Initial Principal | 5,613,919 | ||
Outstanding Principal | $ 2,109,766 | $ 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 | |
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 | |
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] | $ 0 | |
Initial Principal | 273,000 | ||
Outstanding Principal | $ 19,758 | 40,896 | |
Weighted Average Contractual Interest Rate | 5.24% | ||
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] | $ 24,090 | |
Initial Principal | 267,500 | ||
Outstanding Principal | $ 23,755 | 46,489 | |
Weighted Average Contractual Interest Rate | 5.53% | ||
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] | $ 28,533 | |
Initial Principal | 245,000 | ||
Outstanding Principal | $ 26,713 | 52,448 | |
Weighted Average Contractual Interest Rate | 5.31% | ||
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] | $ 35,509 | |
Initial Principal | 250,000 | ||
Outstanding Principal | $ 36,338 | 64,591 | |
Weighted Average Contractual Interest Rate | 5.10% | ||
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] | $ 52,624 | |
Initial Principal | 300,000 | ||
Outstanding Principal | $ 53,579 | 90,639 | |
Weighted Average Contractual Interest Rate | 5.77% | ||
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] | $ 69,830 | |
Initial Principal | 329,460 | ||
Outstanding Principal | $ 71,599 | 119,444 | |
Weighted Average Contractual Interest Rate | 6.10% | ||
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] | $ 84,403 | |
Initial Principal | 332,690 | ||
Outstanding Principal | $ 82,667 | 135,688 | |
Weighted Average Contractual Interest Rate | 6.40% | ||
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] | $ 85,473 | |
Initial Principal | 318,500 | ||
Outstanding Principal | $ 83,696 | 136,114 | |
Weighted Average Contractual Interest Rate | 6.42% | ||
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] | $ 66,807 | |
Initial Principal | 206,325 | ||
Outstanding Principal | $ 65,021 | 104,645 | |
Weighted Average Contractual Interest Rate | 4.74% | ||
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] | $ 73,549 | |
Initial Principal | 206,320 | ||
Outstanding Principal | $ 71,450 | 113,527 | |
Weighted Average Contractual Interest Rate | 4.81% | ||
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] | $ 89,706 | |
Initial Principal | 225,170 | ||
Outstanding Principal | $ 76,201 | 127,726 | |
Weighted Average Contractual Interest Rate | 4.14% | ||
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] | $ 91,672 | |
Initial Principal | 224,825 | ||
Outstanding Principal | $ 80,315 | 131,845 | |
Weighted Average Contractual Interest Rate | 4.08% | ||
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] | $ 93,992 | |
Initial Principal | 196,300 | ||
Outstanding Principal | $ 83,801 | 132,919 | |
Weighted Average Contractual Interest Rate | 3.70% | ||
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] | $ 100,639 | |
Initial Principal | 190,000 | ||
Outstanding Principal | $ 91,258 | 142,643 | |
Weighted Average Contractual Interest Rate | 3.61% | ||
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] | $ 118,234 | |
Initial Principal | 201,823 | ||
Outstanding Principal | $ 111,188 | 167,809 | |
Weighted Average Contractual Interest Rate | 4.01% | ||
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] | $ 140,405 | |
Initial Principal | 230,275 | ||
Outstanding Principal | $ 130,064 | 204,418 | |
Weighted Average Contractual Interest Rate | 4.09% | ||
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] | $ 164,200 | |
Initial Principal | 233,730 | ||
Outstanding Principal | $ 149,470 | 224,189 | |
Weighted Average Contractual Interest Rate | 4.08% | ||
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] | $ 202,830 | |
Initial Principal | 254,400 | ||
Outstanding Principal | $ 186,900 | 0 | |
Weighted Average Contractual Interest Rate | 3.95% | ||
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] | $ 193,284 | |
Initial Principal | 228,275 | ||
Outstanding Principal | $ 184,308 | 0 | |
Weighted Average Contractual Interest Rate | 3.58% | ||
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] | $ 223,764 | |
Initial Principal | 243,513 | ||
Outstanding Principal | $ 216,650 | 0 | |
Weighted Average Contractual Interest Rate | 3.02% | ||
CPS 2019-D [Member] | |||
"Securitization trust debt," and components of debt | |||
Final Scheduled Payment Date | [2] | March 2027 | |
Receivables Pledged at end of period | [1] | $ 267,750 | |
Initial Principal | 274,313 | ||
Outstanding Principal | $ 265,035 | $ 0 | |
Weighted Average Contractual Interest Rate | 2.60% | ||
[1] | Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets. | ||
[2] | The Final Scheduled Payment Date represents final legal maturity of the securitization trust debt. Securitization trust debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the Trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $806.7 million in 2020, $583.8 million in 2021, $358.1 million in 2022, $261.8 million in 2023, $57.5 million in 2024, and $29.9 million in 2025. |
5. Securitization Trust Debt _2
5. Securitization Trust Debt (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Expected finance receivable payments 2020 | $ 806,700 | |
Expected finance receivable payments 2021 | 583,800 | |
Expected finance receivable payments 2022 | 358,100 | |
Expected finance receivable payments 2023 | 261,800 | |
Expected finance receivable payments 2024 | 57,500 | |
Expected finance receivable payments 2025 | 29,900 | |
Restricted cash under various agreements | 135,500 | |
Securitization Trust Debt [Member] | ||
Debt issuance costs | $ 12,000 | $ 11,800 |
6. Debt (Details - Debt outstan
6. Debt (Details - Debt outstanding) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Warehouse lines of credit | $ 134,791 | $ 136,847 |
Residual interest financing | 39,478 | 39,106 |
Subordinated renewable notes | 17,534 | 17,290 |
Total debt outstanding | 194,317 | 195,373 |
Warehouse Lines Of Credit [Member] | ||
Warehouse lines of credit | $ 40,558 | 38,198 |
Interest rate | 5.50% over one month Libor (Minimum 6.50%) | |
Maturity date | Feb-21 | |
Warehouse Lines Of Credit (2) [Member] | ||
Warehouse lines of credit | $ 96,225 | 99,885 |
Interest rate | 3.00% over one month Libor (Minimum 3.75%) | |
Maturity date | Sep-20 | |
Warehouse Lines Of Credit (3) [Member] | ||
Warehouse lines of credit | $ 0 | 0 |
Interest rate | 4.00% over a commercial paper rate (Minimum 5.00%) | |
Maturity date | Dec-21 | |
ResidualInterestFinancing [Member] | ||
Residual interest financing | $ 40,000 | 40,000 |
Interest rate | 8.60% | |
Maturity date | Jan-26 | |
Subordinated Renewable Notes [Member] | ||
Subordinated renewable notes | $ 17,534 | $ 17,290 |
Interest rate | Weighted average rate of 9.75% and 8.53% at December 31, 2019 and December 31, 2018, respectively | |
Maturity date | Weighted average maturity of  April 2022 and January 2021 at December 31, 2019 and December 31, 2018, respectively |
6. Debt (Details - Debt maturit
6. Debt (Details - Debt maturity schedule) - Subordinated Renewable Notes [Member] $ in Thousands | Dec. 31, 2019USD ($) |
2020 | $ 6,006 |
2021 | 4,316 |
2022 | 2,591 |
2023 | 2,121 |
2024 | 825 |
Thereafter | 1,675 |
Total | $ 17,534 |
6. Debt (Details Narrative)
6. Debt (Details Narrative) - USD ($) $ in Thousands | 4 Months Ended | 5 Months Ended | 11 Months Ended | |||
Apr. 17, 2015 | May 11, 2012 | May 16, 2018 | Nov. 24, 2015 | Dec. 31, 2019 | Dec. 31, 2018 | |
Debt issuance costs | $ 2,000 | $ 1,200 | ||||
Warehouse lines of credit amount outstanding | 134,791 | 136,847 | ||||
Unamortized debt issuance costs | 522 | |||||
Residual Interest Financings [Member] | ||||||
Unamortized debt issuance costs | 522 | |||||
Proceeds from residual interest financings | $ 40,000 | |||||
Warehouse Credit Facility [Member] | Citibank [Member] | ||||||
Credit line maximum | $ 100,000 | |||||
Warehouse lines of credit amount outstanding | 96,200 | |||||
Credit line maturity date | Sep. 30, 2021 | |||||
Warehouse Credit Facility [Member] | Fortress Investment Group [Member] | ||||||
Credit line maximum | $ 100,000 | |||||
Warehouse lines of credit amount outstanding | 40,600 | |||||
Credit line maturity date | Feb. 28, 2023 | |||||
Warehouse Credit Facility [Member] | Credit Suisse AG and Ares Agent Services [Member] | ||||||
Credit line maximum | $ 100,000 | |||||
Warehouse lines of credit amount outstanding | 0 | |||||
Credit line maturity date | Dec. 31, 2021 | |||||
Three Warehouse Lines Of Credit [Member] | ||||||
Warehouse lines of credit amount outstanding | $ 136,800 | $ 138,100 |
7. Shareholders' Equity (Detail
7. Shareholders' Equity (Details - Stock purchases) - Common Stock [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total stock purchases, shares | 378,470 | 1,382,401 |
Total stock purchases, average price per share | $ 3.97 | $ 3.81 |
Open Market Purchases [Member] | ||
Total stock purchases, shares | 335,546 | 1,258,797 |
Total stock purchases, average price per share | $ 3.95 | $ 3.77 |
Shares redeemed upon net exercise of stock options [Member] | ||
Total stock purchases, shares | 18,424 | 33,604 |
Total stock purchases, average price per share | $ 3.76 | $ 4.37 |
Other Repurchases [Member] | ||
Total stock purchases, shares | 24,500 | 90,000 |
Total stock purchases, average price per share | $ 4.20 | $ 4.13 |
7. Shareholders' Equity (Deta_2
7. Shareholders' Equity (Details - Assumptions) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | |||
Expected life (years) | 4 years 7 days | 3 years 11 months 26 days | 4 years 7 days |
Risk-free interest rate | 1.53% | 2.74% | 1.59% |
Volatility | 37.00% | 34.00% | 36.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
7. Shareholders' Equity (Deta_3
7. Shareholders' Equity (Details - Option activity) shares in Thousands | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Number of Shares | |
Options outstanding at the beginning of period | shares | 14,421 |
Granted | shares | 1,490 |
Exercised | shares | (488) |
Forfeited/Expired | shares | (75) |
Options outstanding at the end of period | shares | 15,348 |
Options exercisable at the end of period | shares | 11,717 |
Weighted Average Exercise Price | |
Options outstanding at the beginning of period | $ / shares | $ 4.57 |
Granted | $ / shares | 3.53 |
Exercised | $ / shares | 0.86 |
Forfeited/Expired | $ / shares | 4 |
Options outstanding at the end of period | $ / shares | 4.59 |
Options exercisable at the end of period | $ / shares | $ 4.87 |
Weighted Average Remaining Contractual Term | |
Weighted average remaining contractual term, end of period | 3 years 4 months 2 days |
Weighted average remaining contractual term, exercisable at the end of period | 2 years 8 months 9 days |
7. Shareholders' Equity (Deta_4
7. Shareholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 7 Months Ended | 12 Months Ended | |||
Mar. 15, 2020 | Jul. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2008 | |
Weighted average exercise price of stock options granted per share | $ 1.11 | $ 1.06 | $ 1.32 | |||
Voliatility assumptions, minimum | 37.00% | 31.00% | 35.00% | |||
Voliatility assumptions, maximum | 39.00% | 34.00% | 37.00% | |||
Stock-based compensation | $ 2,072 | $ 3,515 | $ 5,715 | |||
Unrecognized stock-based compensation costs | $ 3,100 | |||||
Weighted-average period for unrecognized costs | 2 years 1 month 6 days | |||||
Intrinsic value options outstanding | $ 4,800 | 4,900 | ||||
Intrinsic value of options exercisable | 4,800 | 4,900 | ||||
Intrinsic value of options exercised | 1,400 | $ 869 | ||||
Proceeds from options exercised | $ 422 | |||||
Warrants [Member] | ||||||
Warrants exercised, shares | 2,000,000 | |||||
Common stock issued for warrants exercised, shares | 1,999,995 | |||||
Warrants [Member] | Subsequent Event [Member] | ||||||
Warrants repurchased, shares | 500,000 | |||||
Payment of repurchase of warrants | $ 1,000 | |||||
Warrants [Member] | 2008 Residual InterestFinancing [Member] | ||||||
Warrants issued, shares | 2,500,000 | |||||
2006 Plan [Member] | ||||||
Options authorized under plan | 19,200,000 | |||||
Shares available for grant | 1,458,000 | |||||
Common Stock [Member] | ||||||
Stock repurchase program, total shares authorized to be repurchased | 10,000,000 | |||||
Amount remaining of stock repurchase authorized amount | $ 6,100,000 | |||||
Common Stock [Member] | ||||||
Repurchase of common stock, shares | 378,470 | 1,382,401 | ||||
Average price per share of common stock repurchased (in dollars per share) | $ 3.97 | $ 3.81 |
8. Interest Income and Intere_3
8. Interest Income and Interest Expense (Details - Interest income) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Components of interest income | |||
Interest on finance receivables | $ 211,138 | $ 334,634 | $ 423,567 |
Interest on finance receivables at fair value | 123,059 | 43,863 | 0 |
Other interest income | 2,899 | 1,800 | 607 |
Interest income | $ 337,096 | $ 380,297 | $ 424,174 |
8. Interest Income and Intere_4
8. Interest Income and Interest Expense (Details - Interest expense) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Total interest expense | $ 110,528 | $ 101,466 | $ 92,345 |
Securitization Trust Debt [Member] | |||
Total interest expense | 96,870 | 89,926 | 83,084 |
Warehouse Lines Of Credit [Member] | |||
Total interest expense | 8,402 | 7,752 | 7,933 |
Residual interest financing [Member] | |||
Total interest expense | 3,822 | 2,343 | 0 |
Subordinated Renewable Notes [Member] | |||
Total interest expense | $ 1,434 | $ 1,445 | $ 1,328 |
9. Income Taxes (Details - Inco
9. Income Taxes (Details - Income tax expense) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Current federal tax expense | $ (574) | $ (7,526) | $ 14,369 |
Current state tax expense | 105 | (2,064) | 3,305 |
Deferred federal tax expense | 2,759 | 9,074 | 10,131 |
Deferred state tax expense (benefit) | 1,466 | 4,357 | 501 |
Income tax expense | $ 3,756 | $ 3,841 | $ 28,306 |
9. Income Taxes (Details - Tax
9. Income Taxes (Details - Tax rate effect) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Expense at federal tax rate | $ 1,924 | $ 3,928 | $ 11,225 |
State taxes, net of federal income tax effect | 1,027 | 1,718 | 1,831 |
Stock-based compensation | 169 | 238 | 682 |
Non-deductible expenses | 856 | 824 | 171 |
Effect of change in tax rate | 0 | 0 | 15,117 |
Accounting method change | 0 | (2,100) | 0 |
Other | (220) | (767) | (720) |
Income tax expense | $ 3,756 | $ 3,841 | $ 28,306 |
9. Income Taxes (Details - Defe
9. Income Taxes (Details - Deferred taxes) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Tax Assets: | ||
Finance receivables | $ 0 | $ 1,867 |
Accrued liabilities | 307 | 256 |
NOL carryforwards | 17,240 | 7,736 |
Built in losses | 4,008 | 4,651 |
Pension accrual | 1,927 | 1,552 |
Stock compensation | 4,385 | 4,161 |
Lease liability | 5,232 | 0 |
Other | 164 | 356 |
Total deferred tax assets | 33,263 | 20,579 |
Deferred Tax Liabilities: | ||
Finance receivables | (12,180) | 0 |
Deferred loan costs | (542) | (1,137) |
Lease right-of-use assets | (4,855) | 0 |
Furniture and Equipment | (206) | (254) |
Total deferred tax liabilities | (17,783) | (1,391) |
Net deferred tax asset | $ 15,480 | $ 19,188 |
9. Income Taxes (Details Narrat
9. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income tax expense (benefit) | $ 3,756 | $ 3,841 | $ 28,306 |
Net deferred tax asset | 15,500 | ||
Unrecognized tax benefits | 0 | ||
Tax planning strategies [Member] | |||
Income tax expense (benefit) | $ (2,100) | ||
Federal [Member] | |||
Net deferred tax asset | 11,500 | ||
State [Member] | |||
Net deferred tax asset | 4,000 | ||
Net operating loss carryforward | $ 70,500 | ||
NOL beginning expiration date | Dec. 31, 2024 |
11. Commitments and Contingen_3
11. Commitments and Contingencies (Details - Operating leases) $ in Thousands | Dec. 31, 2019USD ($) |
Operating Leases | |
Operating lease right-of-use assets | $ 23,735 |
Less: Accumulated amortization right-of-use assets | (6,600) |
Operating lease right-of-use assets, net | 17,135 |
Operating lease liabilities | $ (18,527) |
11. Commitments and Contingen_4
11. Commitments and Contingencies (Details - Finance Leases) $ in Thousands | Dec. 31, 2019USD ($) |
Finance Leases | |
Property and equipment, at cost | $ 876 |
Less: Accumulated depreciation | (150) |
Property and equipment, net | 726 |
Finance lease liabilities | $ (718) |
11. Commitments and Contingen_5
11. Commitments and Contingencies (Details - Maturities of lease liabilities) $ in Thousands | Dec. 31, 2019USD ($) |
Maturities of Operating lease liabilities | |
2020 | $ 7,757 |
2021 | 7,449 |
2022 | 6,058 |
2023 | 1,389 |
2024 | 411 |
Thereafter | 278 |
Total undiscounted lease payments | 23,342 |
Less amounts representing interest | (4,815) |
Lease Liability | 18,527 |
Maturities of Finance lease liabilities | |
2020 | 309 |
2021 | 305 |
2022 | 127 |
2023 | 27 |
2024 | 13 |
Thereafter | 0 |
Total undiscounted lease payments | 781 |
Less amounts representing interest | (63) |
Lease Liability | $ 718 |
11. Commitments and Contingen_6
11. Commitments and Contingencies (Details - Lease - Statement of Operations) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Operating lease cost | $ 7,521 | $ 7,124 | $ 6,266 |
Finance lease cost | 160 | 0 | 0 |
Total lease cost | $ 7,681 | $ 7,124 | $ 6,266 |
11. Commitments and Contingen_7
11. Commitments and Contingencies (Details - Lease - Cash flow) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ 7,584 | $ 6,809 | $ 6,053 |
Operating cash flows from finance leases | 133 | 37 | 73 |
Financing cash flows from finance leases | $ 27 | $ 9 | $ 17 |
11. Commitments and Contingen_8
11. Commitments and Contingencies (Details Narrative) | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted Average Discount Rate Operating lease | 5.00% |
Weighted Average Discount Rate Finance lease | 6.40% |
12. Employee Benefits (Details
12. Employee Benefits (Details - Reconciliation) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Change in Projected Benefit Obligation | |||
Projected benefit obligation, beginning of year | $ 20,085 | $ 22,562 | |
Service cost | 0 | 0 | |
Interest cost | 808 | 775 | $ 855 |
Assumption changes | 3,047 | (1,867) | |
Actuarial (gain) loss | 141 | (361) | |
Settlements | 0 | 0 | |
Benefits paid | (1,084) | (1,024) | |
Projected benefit obligation, end of year | 22,997 | 20,085 | 22,562 |
Change in Plan Assets | |||
Fair value of plan assets, beginning of year | 14,368 | 16,446 | |
Return on assets | 3,017 | (1,806) | |
Employer contribution | 0 | 1,000 | |
Expenses | (391) | (248) | |
Settlements | 0 | 0 | |
Benefits paid | (1,084) | (1,024) | |
Fair value of plan assets, end of year | 15,910 | 14,368 | $ 16,446 |
Funded Status at end of year | $ (7,087) | $ (5,717) |
12. Employee Benefits (Detail_2
12. Employee Benefits (Details - Weighted average assumptions) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted average assumptions used to determine benefit obligations | ||
Discount rate | 3.07% | 4.11% |
Weighted average assumptions used to determine net periodic benefit cost | ||
Discount rate | 4.11% | 3.50% |
Expected return on plan assets | 7.25% | 7.25% |
12. Employee Benefits (Detail_3
12. Employee Benefits (Details - Amounts recognized) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Amounts recognized on Consolidated Balance Sheet | |||
Other assets | $ 0 | $ 0 | $ 0 |
Other liabilities | (7,087) | (5,717) | (6,116) |
Net amount recognized | (7,087) | (5,717) | (6,116) |
Amounts recognized in accumulated other comprehensive loss consists of: | |||
Net loss | 13,092 | 11,896 | 11,350 |
Unrecognized transition asset | 0 | 0 | 0 |
Net amount recognized | 13,092 | 11,896 | 11,350 |
Components of net periodic benefit cost | |||
Interest Cost | 808 | 775 | 855 |
Expected return on assets | (1,012) | (1,163) | (1,149) |
Amortization of transition asset | 0 | 0 | 0 |
Amortization of net loss | 376 | 443 | 405 |
Net periodic benefit cost | 172 | 55 | 111 |
Settlement (gain)/loss | 0 | 0 | 0 |
Total | 172 | 55 | 111 |
Benefit Obligation Recognized in Other Comprehensive Loss (Income) | |||
Net loss (gain) | 1,197 | 545 | 732 |
Prior service cost (credit) | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 |
Net amount recognized in other comprehensive loss (income) | $ 1,197 | $ 545 | $ 732 |
12. Employee Benefits (Detail_4
12. Employee Benefits (Details - Asset allocation) | Dec. 31, 2019 | Dec. 31, 2018 |
Weighted Average Asset Allocation at Year-End | 100.00% | 100.00% |
Cash And Cash Equivalents [Member] | ||
Weighted Average Asset Allocation at Year-End | 0.00% | 0.00% |
Equity Securities [Member] | ||
Weighted Average Asset Allocation at Year-End | 82.00% | 78.00% |
Debt Securities [Member] | ||
Weighted Average Asset Allocation at Year-End | 18.00% | 22.00% |
12. Employee Benefits (Detail_5
12. Employee Benefits (Details - Estimated future benefit payments) $ in Thousands | Dec. 31, 2019USD ($) |
Estimated Future Benefit Payments (In thousands) | |
2020 | $ 870 |
2021 | 906 |
2022 | 943 |
2023 | 966 |
2024 | 997 |
Years 2025 - 2029 | 5,592 |
Anticipated Contributions in 2020 | $ 1,052 |
12. Employee Benefits (Detail_6
12. Employee Benefits (Details - Fair value of plan assets) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Fair value of plan assets | $ 15,910 | $ 14,368 | $ 16,446 | |
Level 1 [Member] | ||||
Fair value of plan assets | [1] | 2,950 | 2,635 | |
Level 2 [Member] | ||||
Fair value of plan assets | [2] | 12,960 | 11,733 | |
Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Company Common Stock [Member] | ||||
Fair value of plan assets | 2,950 | 2,635 | ||
Company Common Stock [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 2,950 | 2,635 | |
Company Common Stock [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 0 | 0 | |
Company Common Stock [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Large Cap Value [Member] | ||||
Fair value of plan assets | 2,370 | 1,983 | ||
Large Cap Value [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Large Cap Value [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 2,370 | 1,983 | |
Large Cap Value [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Mid Cap Index [Member] | ||||
Fair value of plan assets | 658 | 563 | ||
Mid Cap Index [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Mid Cap Index [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 658 | 563 | |
Mid Cap Index [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Small Cap Growth [Member] | ||||
Fair value of plan assets | 655 | 559 | ||
Small Cap Growth [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Small Cap Growth [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 655 | 559 | |
Small Cap Growth [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Small Cap Value [Member] | ||||
Fair value of plan assets | 674 | 558 | ||
Small Cap Value [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Small Cap Value [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 674 | 558 | |
Small Cap Value [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Large Cap Blend [Member] | ||||
Fair value of plan assets | 683 | 587 | ||
Large Cap Blend [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Large Cap Blend [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 683 | 587 | |
Large Cap Blend [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Growth [Member] | ||||
Fair value of plan assets | 2,342 | 2,031 | ||
Growth [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Growth [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 2,342 | 2,031 | |
Growth [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
International Growth [Member] | ||||
Fair value of plan assets | 2,667 | 2,301 | ||
International Growth [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
International Growth [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 2,667 | 2,301 | |
International Growth [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Core Bond [Member] | ||||
Fair value of plan assets | 1,909 | 1,921 | ||
Core Bond [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Core Bond [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 1,909 | 1,921 | |
Core Bond [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
High Yield [Member] | ||||
Fair value of plan assets | 386 | 364 | ||
High Yield [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
High Yield [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 386 | 364 | |
High Yield [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Inflation Protected Bond [Member] | ||||
Fair value of plan assets | 509 | 510 | ||
Inflation Protected Bond [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Inflation Protected Bond [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 509 | 510 | |
Inflation Protected Bond [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Money Market [Member] | ||||
Fair value of plan assets | 107 | 356 | ||
Money Market [Member] | Level 1 [Member] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Money Market [Member] | Level 2 [Member] | ||||
Fair value of plan assets | [2] | 107 | 356 | |
Money Market [Member] | Level 3 [Member] | ||||
Fair value of plan assets | [3] | $ 0 | $ 0 | |
[1] | Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. | |||
[2] | All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. | |||
[3] | There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs. |
12. Employee Benefits (Detail_7
12. Employee Benefits (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Benefits Details Narrative | |||
401(k) plan contributions | $ 1,600 | $ 1,500 | $ 1,200 |
Expected long term rate of return | 7.25% | 7.25% | |
Estimated net loss amortized into net periodic benefit cost | $ 382 |
13. Fair Value Measurements (De
13. Fair Value Measurements (Details - Reconciliation of Finance Receivables) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |||
Balance at beginning of period | $ 821,066 | $ 0 | |
Finance receivables at fair value acquired during period | 1,004,194 | 914,949 | $ 0 |
Payments received on finance receivables at fair value | (292,948) | (67,720) | |
Net interest income accretion on fair value receivables | (90,383) | (26,162) | 0 |
Mark to fair value | 2,109 | 0 | |
Balance at end of period | $ 1,444,038 | $ 821,066 | $ 0 |
13. Fair Value Measurements (_2
13. Fair Value Measurements (Details - Finance Receivables to Their Contractual Balances) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Finance receivables measured at fair value | $ 1,444,038 | $ 821,066 | $ 0 |
Fair Value [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Finance receivables measured at fair value | 1,444,038 | 821,066 | |
Contractual Balance [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Finance receivables measured at fair value | $ 1,492,803 | $ 829,039 |
13. Fair Value Measurements (_3
13. Fair Value Measurements (Details - Level 3 Fair Value Measurements) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Finance receivables measured at fair value | $ 1,444,038 | $ 821,066 | $ 0 |
Fair Value [Member] | |||
Finance receivables measured at fair value | 1,444,038 | 821,066 | |
Fair Value [Member] | Level 3 [Member] | |||
Finance receivables measured at fair value | $ 1,444,038 | $ 821,066 | |
Fair Value [Member] | Level 3 [Member] | Discount Rate [Member] | Minimum [Member] | |||
Unobservable Inputs | 8.90% | 8.90% | |
Fair Value [Member] | Level 3 [Member] | Discount Rate [Member] | Maximum [Member] | |||
Unobservable Inputs | 11.10% | 9.90% | |
Fair Value [Member] | Level 3 [Member] | Cumulative Net Losses [Member] | Minimum [Member] | |||
Unobservable Inputs | 15.00% | 15.00% | |
Fair Value [Member] | Level 3 [Member] | Cumulative Net Losses [Member] | Maximum [Member] | |||
Unobservable Inputs | 16.10% | 16.00% |
13. Fair Value Measurements (_4
13. Fair Value Measurements (Details - Delinquency status) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Finance receivables measured at fair value current | $ 1,344,883 | $ 787,707 |
Finance receivables measured at fair value | 1,492,803 | 829,039 |
31 to 60 Days [Member] | ||
Finance receivables measured at fair value | 81,262 | 26,285 |
61 to 90 Days [Member] | ||
Finance receivables measured at fair value | 34,280 | 8,350 |
91 + Days [Member] | ||
Finance receivables measured at fair value | 15,167 | 3,677 |
Repossessed Vehicles [Member] | ||
Finance receivables measured at fair value | $ 17,211 | $ 3,020 |
13. Fair Value Measurements (_5
13. Fair Value Measurements (Details - Fair values) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash and cash equivalents | $ 5,295 | $ 12,787 |
Restricted cash and equivalents | 135,537 | 117,323 |
Finance receivables, net | 841,160 | 1,434,631 |
Accrued interest receivable | 11,645 | 31,969 |
Liabilities: | ||
Warehouse lines of credit | 134,791 | 136,847 |
Accrued interest payable | 5,254 | 4,819 |
Securitization trust debt | 2,116,520 | 2,051,920 |
Subordinated renewable notes | 17,534 | 17,290 |
Level 1 [Member] | ||
Assets: | ||
Cash and cash equivalents | 5,295 | 12,787 |
Restricted cash and equivalents | 135,537 | 117,323 |
Finance receivables, net | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Liabilities: | ||
Warehouse lines of credit | 0 | 0 |
Accrued interest payable | 0 | 0 |
Securitization trust debt | 0 | 0 |
Subordinated renewable notes | 0 | 0 |
Level 2 [Member] | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash and equivalents | 0 | 0 |
Finance receivables, net | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Liabilities: | ||
Warehouse lines of credit | 0 | 0 |
Accrued interest payable | 0 | 0 |
Securitization trust debt | 0 | 0 |
Subordinated renewable notes | 0 | 0 |
Level 3 [Member] | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash and equivalents | 0 | 0 |
Finance receivables, net | 841,160 | 1,434,631 |
Accrued interest receivable | 11,645 | 31,969 |
Liabilities: | ||
Warehouse lines of credit | 134,791 | 136,847 |
Accrued interest payable | 5,254 | 4,819 |
Securitization trust debt | 2,116,520 | 2,051,920 |
Subordinated renewable notes | 17,534 | 17,290 |
Carrying Value [Member] | ||
Assets: | ||
Cash and cash equivalents | 5,295 | 12,787 |
Restricted cash and equivalents | 135,537 | 117,323 |
Finance receivables, net | 885,890 | 1,454,709 |
Accrued interest receivable | 11,645 | 31,969 |
Liabilities: | ||
Warehouse lines of credit | 134,791 | 136,847 |
Accrued interest payable | 5,254 | 4,819 |
Securitization trust debt | 2,097,728 | 2,063,627 |
Subordinated renewable notes | $ 17,534 | $ 17,290 |
13. Fair Value Measurements (_6
13. Fair Value Measurements (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Measurements Details Narrative | ||
Finance receivables related to reposessed vehicles in inventory | $ 28,933 | $ 33,462 |
Valuation adjustment, loss allowance | $ 21,389 | 24,564 |
Recovery rate | 26.00% | |
Estimated fair value and carrying amount of repossed inventory | $ 7,544 | $ 8,898 |
14. Subsequent Events (Details
14. Subsequent Events (Details Narrative) - Subsequent Event [Member] - Asset-backed Securities [Member] - USD ($) $ in Thousands | Jan. 15, 2020 | Feb. 28, 2020 |
Asset-backed notes sold | $ 260,000 | |
Asset-backed notes secured by automobile receivables | $ 260,000 | |
Weighted average yield on notes | 3.08% | |
Receivables sold | $ 170,900 | $ 89,100 |